Will there be inflation or deflation post-vaccine rollout?
Inflation is the rate of change of the price level (i.e., the “cost of living” as measured in dollars). The standard framework economists use to understand price changes is supply versus demand. For example, if supply of an item (i.e., the quantity supplied at any given price) increases while its demand is unchanged, the item’s equilibrium price will fall. While this framework is intuitive, applying it to predict future price changes may not be straight-forward. The reason is that the underlying supply and demand are not fixed, and they are often not observable.