It's more about people holding out on buying things because they believe it will be cheaper later. Food is a bad example because people will always buy food, regardless of the cost. But why would you buy a car if it might be $2,000 cheaper in a few months? Then a few months pass and now it looks like that car might be even cheaper, will you spend now or keep holding out to see if it goes lower?
It's such a bad system when the logic follows the other path too. "I should buy a car now because it's only likely to get more expensive, while my income stagnates"
Not really. My example was just about inflationary driven spending, and how it's not really the driving factor of consumer behavior.
It's possible that the difference in rate of inflation and compensation leads to a decrease in purchasing power, without decreased economic activity (on paper). Maybe less people are spending, but those that are, are spending more (the niche driven spending we're currently seeing where prices are inflated and specific consumers are paying those prices, offsetting the lack of spending from others).
You mentioned “while my income stagnates.” That’s the decreased economic activity which is the crucial difference in inflation vs stagflation. Inflation isn’t necessarily a bad thing provided wages are rising at a comparable rate.
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u/Terpcheeserosin 8h ago
So things don't cost less
But money can buy more?
So right now eggs are 10$ a pack
After deflation
You can buy 2 for 10 dollars because "money can buy more"
How is that not also, "eggs cost less" ?