Inflation: No, Your Eggs Won’t Be $4 Again

If you’ve been anywhere near a news headline (or ahem during recent political campaign speeches), you might have heard claims that prices will drop back to where they were in the "good old days." Hate to break it to you, but that’s not how inflation works.

Here’s the deal: inflation measures how fast prices rise. When inflation slows down, it just means prices aren’t skyrocketing anymore—it doesn’t mean they’ll drop back down. Think of it like running on a treadmill: if you slow down, you’re still moving forward, just not as fast.

Historically, inflation has gone up and down like a roller coaster, but mostly up. Here’s a fun chart showing U.S. inflation trends over the past 30 years—spoiler alert: prices always trend up. Even in periods of low inflation, costs of goods still rise due to factors like supply chains, wages, and demand.

Inflation Rate Trends: Over the past 30 years, inflation has shown significant fluctuations, peaking around 2020 with rates exceeding 6%, and then coming down to normal levels, around 3% (@Dec 24/early 2025)

Taking Macro Econ this semester has made me realize inflation isn’t just a scary news buzzword; it’s part of how economies grow. The U.S. inflation rate by year shows how much prices for goods and services rise year-over-year. The inflation rate typically reacts to phases of the business cycle, which is the natural cycle of expansion and contraction that the economy goes through over time. The Federal Reserve has a target annual inflation rate of 2%, and it uses monetary policy to keep inflation in check and stabilize the economy when inflation rises above that benchmark.

The key for us? Learning how to budget and invest smartly so you’re not caught off guard when your $5 Starbucks order inevitably turns into $7. (and it will, or has it already?)