Million Bazillion Academy, week 1: Inflation

Three children measure and inspect chip bags of various sizes, all $5.
Click the image to print a version of this illustration you can color in yourself! (Ashanti Fortson)

Inflation is like the weather.

It’s a fundamental force in the economy that affects everyone, though not necessarily in the same way. Like heat and humidity, it’s always there, but hopefully it’s mild enough so you hardly notice.

Our young listener, Alder, wanted to know more, so our kids’ podcast, “Million Bazillion,” traveled back in time to explain.

We’ll explore: 

  • Why money is worth less over time
  • How inflation can get out of control and impact the economy
  • Sneaky ways businesses hide inflation from us

To help your kids learn, we offer these resources: 

  • A “Million Bazillion” episode to listen to together 
  • A pocket guide to the other kinds of ‘flation out there: deflation, disinflation, hyperinflation and stagflation
  • An activity that will help your kids become smart shoppers and avoid being taken in by shrinkflation
  • More Marketplace stories if you want to delve deeper into inflation and how the government manages it 

Listen to this!

The kids want to know!

We got a few follow-up questions from kids who want to know about the other kinds of ‘flation out there.

“My dad and I listen to the show every morning on the way to school,” Eleanor, age 8, wrote us. “He has a 100 trillion dollar bill from Zimbabwe. He said it’s not worth anything though and told me to ask you about hyperinflation.”

Great question! Remember in the episode when Bridget and Ryan were riding an inflation carousel that was speeding up and making everyone sick? When hyperinflation is happening, that merry-go-round turns into a Gravitron.

We just learned that the Federal Reserve likes to keep America’s annual inflation rate at 2%. In the past few years, that number got as high as 9%, leaving many people feeling squeezed by higher prices. But in Zimbabwe from 1980 to 2022, the average annual inflation rate was 672.5%.

When prices go that high that fast, regular folks’ pay can’t keep up. In Venezuela, another country dealing with triple-digit hyperinflation, a gallon of milk costs about as much as a minimum-wage worker makes in a month. Daily life becomes really hard, and some citizens flee to a country with a better economy before their money is worth even less.

Zimbabwe eventually abolished its currency and switched to the U.S. dollar, but that created its own problems, so the government reintroduced its own currency. Inflation is still so out of control, and dollar bills are so rare, that Zimbabwean businesses are issuing coupons instead of change. Today, the value of that $100 trillion bill is limited to what it can sell for as a novelty item on eBay.

Other kinds of ‘flation that your kid should know about:

  • Deflation: The opposite of inflation, when prices fall. That might sound good on its face, but it’s actually a sign of a weakening economy. People and businesses become less willing to spend, which can lead to the loss of jobs.
  • Disinflation: When inflation is high, this is what you want. It means the merry-go-round is slowing to a more comfortable speed. In a period of disinflation, prices are still rising, but in a slower, more predictable way.
  • Stagflation: The worst of both worlds. Prices are rising fast, but the economy isn’t growing. It may even be in a recession. When an economy is suffering stagflation, people often lose their jobs while everyday essentials like food get more expensive. It’s a Catch-22 because the different levers the Federal Reserve can pull to address one problem might make the other worse.

Let’s find examples of shrinkflation!

Sahana, age 10, wants to know about one more kind of ‘flation: “shrinkflation.”

Shrinkflation is different from the ‘flations above because it’s not a broad economic condition, but more a byproduct of inflation. When prices are going up, some companies find sneaky ways of giving customers a little less stuff while keeping the price the same. 

Take Haagen-Dazs, which has long sold 14 ounce containers of ice cream instead of the more typical 16 ounce pints. You have to check the tiny print on the label because the containers look basically the same when you’re at the store.

That’s just one classic case, though. Shrinkflation is everywhere. Just look at these examples “Marketplace” listeners sent in.

When you’re out running errands this week, encourage your kid to take a closer look at the items on store shelves. Some chains list “per oz.” or another apples-to-apples price measurement, but you may have to read the fine print and do the math yourself to see the difference from the previous price of the product.

You could also check out, where consumer advocate Edgar Dworsky catalogs examples of shrinkflation, with updates every week.

Extra credit!

Here are bonus reads and listens from Marketplace, if you or your kid want to learn more about inflation.

Next week: Currency!

Pull out your wallets! We’re going to take a closer look at dollar bills next week: How they’re made and what all the symbols on them mean.