inflation
To economists, the rate at which prices are rising. To most people, the fact that prices are high. When officials said inflation was falling, many people heard a claim that prices were coming down.
- Type
- Word
- Scales
- Public
- Who notices?
- Nobody notices
- Related
- The Arguments We Don’t Know We’re Having
- Sources
- Civiqs poll (2023); Stantcheva, Brookings (2024)
Meanings
inflation-1: the rate of change
The rate at which prices are rising. When inflation falls, prices are still going up, just more slowly.
Used by: Economists, central banks and official statistics.
inflation-2: the price level
Prices being high. If inflation is going down, prices should be going down.
Used by: Most people, in everyday speech.
The moment it caused a fight
Through 2023, economists and officials kept saying inflation was coming down. It was: the rate peaked at about 9 percent in 2022 and was around 3 percent by the end of 2023. But groceries and rent weren’t getting any cheaper, so many people concluded they were being lied to.1
The evidence
- In December 2023, a Civiqs poll asked registered voters what “inflation going down” means. Only 21 percent gave the economists’ answer (prices are still rising, but more slowly). Twenty-six percent said prices go down, and 41 percent said prices stay the same.1
- In a study published by Brookings in 2024, Stefanie Stantcheva asked people to define inflation in their own words. About 52 percent gave roughly correct answers and 44 percent did not.1
- In a published comment on that study, the economist Alan Blinder pointed to “the public’s failure to differentiate between the price level and the rate of change in the price level.”1
Who noticed?
Nobody, mostly. The economists didn’t notice they were using a technical meaning, and the public didn’t notice there was a technical meaning to notice. Each side concluded the other was clueless or dishonest.
The taboo round
Without the word “inflation”:
- The economists’ claim: prices are still rising, but more slowly than they were in 2022.
- The public’s claim: prices are much higher than they were, and they aren’t coming back down.
Both statements were true at the same time. Restated this way, they don’t contradict each other.
Sources
-
Civiqs poll (2023); Stantcheva, Brookings (2024). Full reference ↩ ↩2 ↩3 ↩4