The simplest factor is that more money gets printed. One of the foundational assumptions of market systems is that the more of something there is the less valuable it is (generally speaking). So inflation is just your dollar slowly getting less valuable over time
Ultimately no one agrees 100% on the answer. But we can say there are two major reasons.
Demand is significantly higher than supply, thus raising prices. It basically costs more to buy the same thing because it’s scarce.
Or prices go up because raw materials cost more. Tariffs are an artificial way to add costs of production. But lack of the basic materials causes prices to go up thus lowering purchasing power.
To a lesser extent, public sentiment can drive inflation. And printing money as well.
All of this is exacerbated by the dollar not being tied to gold anymore.
But why
The simplest factor is that more money gets printed. One of the foundational assumptions of market systems is that the more of something there is the less valuable it is (generally speaking). So inflation is just your dollar slowly getting less valuable over time
Ultimately no one agrees 100% on the answer. But we can say there are two major reasons.
Demand is significantly higher than supply, thus raising prices. It basically costs more to buy the same thing because it’s scarce.
Or prices go up because raw materials cost more. Tariffs are an artificial way to add costs of production. But lack of the basic materials causes prices to go up thus lowering purchasing power.
To a lesser extent, public sentiment can drive inflation. And printing money as well.
All of this is exacerbated by the dollar not being tied to gold anymore.