It does not matter if inflation was 2, 4 or 8 percent. or whether you see inflation as high or not.
When your yearly salary is not keeping up with whatever the inflation rate is, it is still going to kill you over time just in small increments.
My wife has been here for twenty years. In that 20 years, her salary has not doubled. But the cost of just about everything else has. Milk, chicken, etc. And the cost of maintaining our home, including medical, electricity, and gas, has also doubled. When she got here 20 years ago, gas was 87 cents per gallon. Now it is 4 dollars per gallon. Her salary is not keeping up with that. And that goes for most folks.
So as example, if she was making 25 dollars per year (50,000 annually) 20 year ago, and now makes 35 dollars per year (70,000 annually), but the household expenses went from 20,000 dollars to 50,000 dollars, are you any better ahead. She has 10,000 less today than 20 year ago.
Businesses are charging twice for their products across the board for most items. But that does not translate into paying their workers double over that same timeframe. Because businesses do not have twice the cash they did even though the products are being sold for twice the cost.
Why is that?
Because what you need to do today to operate a small (or large) business is massive in administration, overhead, and everything else included by piled on with regulations, mandates, and requirements. This does not translate into more taxes for the government, but does play a part in the ever growing levels of government on all levels. The number of folks working at the township building has exploded over those twenty years, the number of administrators and support staff at the schools has double. We have an agency for everyone and everything. The additional small taxes, service fees, permits, and fees just to run a small business today is mind boggling as compared to 20 years ago.
So when inflation is 2 % a year, but the average household or business expense goes up 3 % each year to operate, on a single year basis, who really notices? But factor in that same model over twenty years, and it is staggering to know how far behind we are from 20 years ago.
And I blame the government for this. Just to put on a addition at the school, it will cost 80 million dollars. I think (or thought) they could build a new entire school for 80 million. But then you start looking at the project and the first 20 million go for designers, engineers, permits, environmental requirements, legal expenses, and a host of things before the first shovel of dirt is even dug. It's insane.
On a smaller scale, townships now require permits and fees for everything you can do around your house. Even 6x10 storage sheds required permits and fees. Some townships around here are even starting to charge registration fees for a backyard beehive, even though the state already collects and mandates it. We have money pouring out of our pockets for things twenty years ago they could never of even dreamed about.
So with increased costs going to run a household, with increased fees, taxes, permits, etc., then it just tips the scales that much sooner.
2% inflation is not killing us. It is everything combined with the 2% inflation that is burying folks slowly over time.
Government is causing these problems. But then they get to fool many folks by standing up and pointing fingers at a few select large businesses, and say all these problems will go away if it were not the greedy corporations, what a great plan that is. Greedy corporations have always been around. And on average, they pay very well. Comments like "Big money has us divided and where they want us" is a smoke screen and just points folks in the wrong direction. Get over it. Government is making a killing at the pumps but not a peep. And small businesses make up a huge portion of the economy, which has nothing to do with "big money". I think government red tape trumps big greedy businesses everytime in who impacts and controls inflation, expenses, etc. Most folks are not employed by huge businesses.
Many folks are being strangled, while debating whether 2% inflation is high or low. Your missing the point.