Why is everything so expensive? Business basics: Inflation

Added: 2026-05-17

[00:00:00]Why does everything suddenly feel so [music] expensive? Let's talk about inflation. Inflation is basically when prices go up across the board. That normally happens when people and businesses are spending faster than the economy can keep up. So, demand outpaces supply and prices rise. What causes this, you ask? Well, economists don't fully agree. Some say it's too [music] much government spending pumping money into the system. Others blame the Fed for keeping interest rates low for too long [music] making it cheap to borrow and spend. And some point the finger at big companies gaining monopoly power and raising prices more than they need to.

[00:00:28]Most economists do agree that supply shocks, such as the disruptions to shipping during the pandemic, can at least temporarily worsen inflation.

[00:00:34][music] Either way, you feel it. If your pay doesn't rise as fast as prices, you're effectively getting poorer. Rent, [music] groceries, fuel, everything eats up more of your income and there's not as much left for the fun stuff. But not all inflation is measured the same way.

[00:00:46][music] You may hear something called core inflation. That's basically inflation with the volatile food and energy categories stripped out. Those prices can jump around a lot more from month to month. So, core inflation helps economists to see the underlying [music] trend more clearly. So, how do we even know inflation is happening? Governments like the Fed often raise interest rates.

[00:01:03]This makes borrowing more expensive, meaning people spend less and demand cools off. Governments can also step in by cutting spending or increasing taxes.

[00:01:15]But as you can imagine, these options aren't really crowd favorites. So, if your weekly shop feels more expensive lately, it's not just you. [music] Inflation is certainly playing its part.