How inflation works: why your money buys less every year
The wage-price spiral: can the fear of inflation cause inflation?
Workers ask for higher pay because prices went up. Shops raise prices because pay went up. How does the circle start, and why do central banks worry so much about what people expect?
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1
Rono's rent went up 8%, and so did his bus ticket. He asks Miva for 8% more pay: from $15 to $16.20 an hour.
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2
Miva says yes. Rono works hard, and she does not want to lose him. But her costs just went up again.
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