Why the 2% Inflation Target? (2023)

Re:Why the 2% Inflation Target? (2023) by graeme on Saturday March 23, 2024 @09:39AM (#39799857)

You’re imagining every firm gets 2% savings every year. That isn’t how it works.

Most firms have rising real wages: real wages rose during the 2% inflation period.

But sometimes a firm needs to lower costs. Having a small bit of inflation lets a firm do so without either firing people or actually cutting nominal wages.

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Re:Why the 2% Inflation Target? (2023) by derangedHorse on Saturday March 23, 2024 @10:34AM (#39800228)

> real wages rose during the 2% inflation period

There is no consistent "2%" inflation period. If a year were to have 6.5% inflation (like with year 2022-2023), most firms will not raise real wages to match it. Over the last decade we've had a 2.82% average inflation rate with 4.41% variance showing how much we overshot both metrics.

source: https://www.usinflationcalculator.com/inflation/consumer-pri...

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