Skip to main content

Welcome to the new Federal Reserve Education website. Register an account and start saving favorite resources!

Back to All
Resources
New!
Video Q&A
0-15 min
Economics

What is Inflation?

OVERVIEW

Have you ever been shopping and noticed that the prices of a range of things you buy have gone up? If the same things in your shopping basket cost $100 last year and now they cost $105, at a very basic level, that’s “inflation.” In this video assignment, students will learn what is and what is not inflation.

 
Grade Level
Topics

What is inflation? In life, you buy things all the time. You probably notice that gradually the cost of items tends to increase. This is known as inflation, but what exactly does inflation mean? We've all gone to the store and seen a price rise like with these oranges. So is that alone a sign of inflation? Well, it depends. Let's look at another example with these lemons. Prices can go up or down for many reasons. For instance, lemons may go up in cost because of a freeze that reduces supply. But this type of increase is just temporary. Once growing conditions return to normal, the price goes back down to its previous level showing this was not inflation. Inflation occurs when not just in one category, but across the entire economy, prices of many goods and services trend upwards over time. So now you know, but should you care, absolutely catch our next episode to see why.

Icon of a person raising their hand

Need Help?

Find answers to any questions you have.
Get Support