Finance expert explains why there's a price increase when inflation is coming down and how it's productive

The talk of today is the economy, the inflation and the ever-increasing prices. With the holiday season and time for gifts, it is next to impossible for many to afford gifts along with shopping because of the expensive rates. While it has taken a toll on many, it isn’t necessarily bad for the economy. Banker and finance expert Dean shared his views in a TikTok video. He believes that inflation may be coming down but prices aren’t and that is a good level to be on compared to deflation. Sharing his insight, he explained how inflation has got the best of many. 

The question was, “If inflation is coming down, why does everything cost so much?” To this, the finance expert couldn’t help but agree and relate. He said, “Inflation is not coming down. It is causing the prices of everything to go up right?” He then spoke about how everything from milk, eggs and other groceries to even simple meals like McDonald’s and more have people’s pockets wiped clean. Dean then introduced the concept of disinflation and explained that it is very different from the term others are familiar with deflation. “Disinflation is what we’re going through right now,” the expert said. He then shared that prices of appliances, gas and so on are down compared to the increase. 

“Disinflation means the rate of the price increases is down,” he explained. He then recalled that banks have to apply a 2% increase which is why things get expensive. “The things you bought this December and last December, if you compare now, things you bought this December are 3.5% more,” he said. He added a very meaningful statement saying, “Things are getting better but they’re not getting cheaper.” He then mentioned that if things were to get cheaper, it wouldn’t be disinflation. Dean further explained the difference by emphasizing what deflation is. He clarified that deflation is more than just prices going down, it’s not great. 

“Disinflation means the reduction in the level of price increase. It was 9% earlier, it is now 3% or so,” the expert said. He then added that even though things are going up, they’re going up by 3% only which is why it is economically better when compared to the previous 9%. “Deflation is a reduction in prices, it’s like everything becomes cheaper. That’s not a good sign,” Dean explained. He said that any economy with deflation is likely to be suffering financially. He shared the insight that those with a healthy economy wouldn't go through deflation.

“We’re in a disinflation period but that doesn’t mean prices are getting cheaper, they’re still gonna be expensive,” the expert said. Several commenters were grateful for the understanding imparted by Dean. Knowing the difference between inflation, disinflation and deflation is highly helpful in an ever-changing economy. @mamaoffourboys3 said, “Inflation is slowing. That doesn’t mean prices are dropping, they’re just rising at a slower rate.” @jw_carphotos said, “Inflation goes up and rarely comes down. It’s just the rate at which it’s inflating is slowing down.”