Understanding inflation

amother

Thu, Nov 30 2023, 8:44 am

I keep reading articles about how inflation is way down and almost at the "normal" 2% yearly target. Here's a recent article that shows inflation at around 3%.

https://www.forbes.com/advisor.....rate/

Can someone more educated in this stuff help me understand this better? It seems inflation is measured in 2 ways:

1. Against the previous month.
2. Against 12 months earlier.

So we can have a situation where for a year and a half prices were exploding higher and for example groceries went up 50% during that time. But once things cool off and prices stop rocketing higher it seems the economists say inflation is over. But it doesn't consider that the inflation that already happened is still fixed in the prices. They only care that it's not continuing higher and this gives them the basis to say that inflation is over.

Imagine gd forbid someone loses 10% of their salary every month for 6 months. If they started at $100,000 then after 6 months they'd be left with a little over $50,000. Then this decrease stops. Does this mean after some time goes by and the employee is left making only $55,000 or so they should be happy things stabilized? Of course not- it's still down from the 100k it was previously!

So how do economists celebrate inflation stabilizing when compared to where it was a few years ago, it's off the charts? True if you compare it to 12 months ago it's not bad but the damage was already done.

Does this make any sense? It seems so ridiculous that I figure I must be missing something. Can anyone fill me in?