Why Everything Costs More Every Year (Inflation Explained)

The same slice of pizza, the same cheese, the same crust, yet the price keeps climbing. So why does the same slice of pizza cost more every year? In this video you follow Rosa, an imaginary pizza shop owner, through a good year and a bad year to see how inflation really works. You will learn what inflation and purchasing power are, how the Bureau of Labor Statistics measures prices with the Consumer Price Index, why 100 dollars from the year 2000 now buys about half as much, the two causes of inflation (demand-pull and cost-push), what drove the 2022 spike to 9.1 percent, how the Federal Reserve uses interest rates to aim for 2 percent, what hyperinflation looked like in Zimbabwe, and two practical habits for protecting your own money. Chapters 0:00 Why the same slice costs more 0:28 What inflation is 0:53 Purchasing power 1:15 The Consumer Price Index 1:56 The inflation rate today 2:24 How small rises add up over decades 2:55 Who raises prices 3:09 Rosa's Slices 3:29 Demand-pull inflation 4:10 Cost-push inflation 4:59 The 2022 inflation spike 5:35 The Federal Reserve and the 2% goal 6:10 How interest rates fight inflation 7:20 Mild inflation vs hyperinflation 8:00 Zimbabwe's 100 trillion dollar note 8:35 What inflation does to your savings 9:14 The answer Important: Rosa, Rosa's Slices and the shop's figures ($3 and $4 slices, $1 and $2 ingredient costs, 200, 300 and 150 slices, $400, $600 and $300 a day), the $3 to $4 lunch slice in the opening, the $20 bill, the $1,000 loan at 5% and the $1,000 kept in a drawer are fictional and illustrative, used only to explain the mechanism. The 1970 slice is a $1 price scaled by the CPI, not a real menu price. This video is general education, not financial advice. Sources U.S. Bureau of Labor Statistics, Consumer Price Index: questions and answers (what the CPI measures, about 80,000 items, over 90% of the population): https://www.bls.gov/cpi/questions-and... U.S. Bureau of Labor Statistics, Consumer Price Index, September 2026 (3.7% over 12 months; gasoline +9.1% in the month): https://www.bls.gov/news.release/cpi.... U.S. Bureau of Labor Statistics, CPI news release, June 2022 (9.1%, largest since November 1981; energy +41.6%, food +10.4%): https://www.bls.gov/news.release/arch... U.S. Bureau of Labor Statistics, CPI news release, June 2023 (3.0%): https://www.bls.gov/news.release/arch... FRED, Consumer Price Index for All Urban Consumers, not seasonally adjusted (CPIAUCNS), used for the purchasing-power figures: https://fred.stlouisfed.org/series/CP... U.S. Bureau of Labor Statistics, CPI Inflation Calculator: https://www.bls.gov/data/inflation_ca... Federal Reserve, Why does the Federal Reserve aim for inflation of 2 percent over the longer run?: https://www.federalreserve.gov/faqs/e... Federal Reserve, Open market operations (federal funds target range history): https://www.federalreserve.gov/moneta... Adam Hale Shapiro, "How Much Do Supply and Demand Drive Inflation?", FRBSF Economic Letter 2022-15: https://www.frbsf.org/wp-content/uplo... Steve H. Hanke and Alex K. F. Kwok, "On the Measurement of Zimbabwe's Hyperinflation", Cato Journal 29(2), 2009: https://www.cato.org/sites/cato.org/f... BBC News, Zimbabwe's 100 trillion dollar note (January 2009): https://news.bbc.co.uk/2/hi/africa/78... #inflation #economics #personalfinance #money #federalreserve #cpi #explained