LETTER: No comfort in falling inflation rates
When Albert Einstein was asked what was mankind’s greatest invention, he replied “compound interest.” An account that makes 7 percent a year will double in 10 years because money makes money, and the money money makes makes money. The same is true in an opposite and pernicious way with inflation. One year costs increase 2 percent. The next year 3 percent compounded on top of that.
The Bureau of Labor Statistics reports the consumer price index increased 1.2 percent in 2020, 4.7 percent in 2021, 8 percent in 2022 and 4.1 percent in 2023. The compounded growth of CPI from 2020 to 2023 has been more than 19 percent. Not many people have seen a similar growth in their after-tax income.
Consumers should take little comfort in reading that inflation is coming down. The compounded rate grows at a lesser rate, but it still grows on top of past rates. I suggest that our politicians spend less time attacking each other and more time developing a plan — like cutting government spending — to reduce inflation.