Why Do Inflation Rates Go Up When People Are Sad?

Inflation is like when a toy costs more money. If people are sad, they might spend less, but sometimes that makes prices go up. It’s kind of like when everyone in class stops buying snacks, the snack price goes up because fewer people are buying them.

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Examples

When a kid feels sad after losing a game, they might stop buying candy, and the candy price goes up.
If all your friends are feeling down, you might save your money for later, and that makes prices go up too.
A restaurant owner sees fewer people coming in, so they raise their prices to make more money.

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Categories: Economics · inflation· behavioral economics· emotions and economy· economic psychology· consumer behavior