Why do I not see goods and services all change their price when inflation is high?
In most circumstances prices do not change on a daily basis on most goods and services, and just because inflation is high does not mean all prices of every good and service has to increase over the short term.  Prices are determined by costs of doing business, manufacturing costs and wage growth, and by competition.  For example, if one product has very little competition and costs to produce it have gone up, then the seller might increase prices by 10% to cover their cost of buying the goods off the manufacturer, whilst another product may have plenty of competition, the seller has sourced a new manufacturer from overseas with lower manufacturing costs, they might lower their selling costs by 5% to better compete and increase their sales. Inflation figures are calculated from a set basket of goods and services, and if inflation increases it does not mean that all prices in that basket have gone up, only that the aggregate for the whole basket of goods and services has gone up since the last inflation figures were calculated. How high is high? In countries that suffered hyperinflation such as the Weimar Republic around 1923 and Zimbabwe around the late 1990s this certainly did happen on a daily basis. E.g. One boy, who was sent to buy two bread buns, stopped to play football and by the time he got to the shop, the price had gone up, so he could only afford to buy one. or One father set out for Berlin to buy a pair of shoes. When he got there, he could only afford a cup of coffee and the bus fare home. or At the height of the country's economic crisis that year, prices were rising at least twice day, with Zimbabweans forced to carry cash around in plastic bags just to buy basic items. It can take a while for inflation to seep into all aspects an economy and be felt by a consumer. Often, things that consumers use the most (like gasoline, wheat products, corn products, soy products, and sugar), are commodities spread across global markets with their own pricing which may be impacted by inflation in any given country.  Also, inflation can be beneficial in some ways. A $500/month mortgage payment was a big deal 30 years ago, and now would be considered trivial. That's entirely because of inflation.  Run-away inflation, where people are burning the currency to stay warm, is a different beast altogether. Be wary of people who conflate inflation, consumer pricing, and destructive currency devaluation, because they're not the same things.
no, it doesn't mean it's right at all. They probably sell them at a premium now boasting that they are 'all American made'  New coke all over again?  I live in a little town on the south west of Scotland called Kilmarnock.  One of our last major manufacturers is in the final phases to pull out after being there since 1820. The name? Johnnie Walker - you may have heard of them.  Another major manufacturing company left a skeleton crew a good number of years ago - there are still steam engines that were built there running in Africa even today.  http://en.wikipedia.org/wiki/Andrew_Barclay_Sons_%26_Co.  And one last company http://www.masseyferguson.com/EMEA/GB/about/242.aspx  Do you know what ultimately killed these 3 companies in Kilmarnock?  The workers, or at least - or - to be more precise the Unions.  Not that I'm against unions - at least not the realistic ones.  Johnnie Walker is the last large manufacturing giant to move out of Kilmarnock.  A town that is now pretty much a ghost town with an incompetent council.  All were high paid jobs - I'm sure we would all love $25 an hour to press an on off button and watch an emergency stop, how many do that here for less? Why should the above have been getting more?  Because they could, they were so used to the high life (when things were good) that they would not settle for anything else, ultimately running the companies out of the area when machines and lesser workforce were more than capable. Diageo (JW owner) is pulling the line back to a generic factory in another Scottish location, cheaper to run, more modern and lesser wages.  I'm glad to see manufacturing coming back and having worked in customer relations for a large conglomerate I think we are on the brink of change.  It's still up hill and you'll be talking to Indians by the name of Frank for a few years yet to come - but it's impacting their bottom line and at the end of the day -- THAT is all that matters.  It's the massive conglomerates we need to worry about - they'll destroy people and tradition to pad their wallets. Oh, yeah... tradition - Cadbury - just came to mind.  Why do we let them get so big? when just one slice and thousands of people and products are off the shelves for good ... even when they are profitable?  http://www.independent.co.uk/news/business/news/taxpayers-braced-for-1bn-blow-from-rbs-scandals-8002175.html  http://www.thisismoney.co.uk/money/markets/article-2196043/RBS-blasted-3-2m-golden-hello-paid-new-retail-chief-Ross-McEwan.html  It does sicken me that when austerity bites - the people at the top who cream the riches during the good never seem to suck up the piss  during the bad.  But going back on topic, if you are not willing to do the job for $15 dollars an hour that's fair enough -- but I'm sure there are still plenty of other Americans that would love that job and they know it. Here's my view, as a 38yr old NZer who grew up in Auckland: When you purchase a residential property, whether or not you intend to live in it, you're essentially counting on the possibility that one of the following will occur: This report by the NZ Royal Society (going by memory from a presentation I attended) predicts ongoing population growth in NZ, mainly driven by immigration, and mostly in Auckland. Building of new housing isn't keeping up with population growth, so my bet would be that the property values, especially in Auckland, are going to continue to climb.  Other factors that might influence your decision are things only you can know, such as where you might be likely to settle down, how much risk you're willing to take, how much capability you have to look after a rental property, and how much knowledge you have about the property market. Bear in mind that government schemes and world events may change the outlook for number of houses being built and immigration levels, both of which heavily affect property values. My personal view is that the government isn't doing nearly enough to provide affordable housing for our young adults in NZ. Not only that; the govt is essentially responsible for the problem in the first place, as zoning rules for local authorities artificially inflate land prices which prevent the building of affordable houses. Furthermore, foreign investment in rental properties is unregulated and unmeasured. Both these problems could be resolved with appropriate legislation, though central city prices are unlikely to be relieved as much as other areas simply because prices are also inflated due to the desirability to live centrally. The problem is a severe one, and high housing prices for even the smallest dwellings are going to make inequality, and the social problems that go with it, far worse. I'd like to see new cities or towns being planned and built from scratch, such as Pegasus and Canberra. "Ok, you go ahead and start a big store with high rent and high prices with better ""service"" and see how long you last. American consumers shop on price, and when they don't, they go to Apple. For information, they can get it on the internet.   The decline of all full-service airlines in the US proves this. Price is all that really matters to people who are spending their own money." "Probably the best way to investigate this is to look at an example. First, as the commenters above have already said, the log-return from one period is log(price at time t/price at time t-1) which is approximately equal to the percentage change in the price from time t-1 to time t, provided that this percentage change is not big compared to the size of the price. (Note that you have to use the natural log, ie. log to the base e -- ln button on a calculator -- here.) The main use of the log-return is that is a proxy for the percentage change in the price, which turns out to be mathematically convenient, for various reasons which have mostly already been mentioned in the comments. But you already know this; your actual question is about the average log-return over a period of time. What does this indicate about the stock? The answer is: if the stock price is not changing very much, then the average log-return is about equal to the average percentage change in the price, and is very easy and quick to calculate. But if the stock price is very volatile, then the average log-return can be wildly different to the average percentage change in the price. Here is an example: the closing prices for Pitchfork Oil from last week's trading are: 10, 5, 12, 5, 10, 2, 15. The percentage changes are: -0.5, 1.4, -0.58, 1, -0.8, 6.5 (where -0.5 means -50%, etc.) The average percentage change is 1.17, or 117%. On the other hand, the log-returns for the same period are -0.69, 0.88, -0.88, 0.69, -1.6, 2, and the average log-return is about 0.068. If we used this as a proxy for the average percentage change in the price over the whole seven days, we would get 6.8% instead of 117%, which is wildly wrong. The reason why it is wrong is because the price fluctuated so much. On the other hand, the closing prices for United Marshmallow over the same period are 10, 11, 12, 11, 12, 13, 15. The average percentage change from day to day is 0.073, and the average log-return is 0.068, so in this case the log-return is very close to the percentage change. And it has the advantage of being computable from just the first and last prices, because the properties of logarithms imply that it simplifies to (log(15)-log(10))/6. Notice that this is exactly the same as for Pitchfork Oil. So one reason why you might be interested in the average log-return is that it gives a very quick way to estimate the average return, if the stock price is not changing very much. Another, more subtle reason, is that it actually behaves better than the percentage return. When the price of Pitchfork jumps from 5 to 12 and then crashes back to 5 again, the percentage changes are +140% and -58%, for an average of +82%. That sounds good, but if you had bought it at 5, and then sold it at 5, you would actually have made 0% on your money. The log-returns for the same period do not have this disturbing property, because they do add up to 0%.  What's the real difference in this example? Well, if you had bought $1 worth of Pitchfork on Tuesday, when it was 5, and sold it on Wednesday, when it was 12, you would have made a profit of $1.40. If you had then bought another $1 on Wednesday and sold it on Thursday, you would have made a loss of $0.58. Overall, your profit would have been $0.82. This is what the average percentage return is calculating. On the other hand, if you had been a long-term investor who had bought on Tuesday and hung on until Thursday, then quoting an ""average return"" of 82% is highly misleading, because it in no way corresponds to the return of 0% which you actually got!  The moral is that it may be better to look at the log-returns if you are a buy-and-hold type of investor, because log-returns cancel out when prices fluctuate, whereas percentage changes in price do not. But the flip-side of this is that your average log-return over a period of time does not give you much information about what the prices have been doing, since it is just (log(final price) - log(initial price))/number of periods. Since it is so easy to calculate from the initial and final prices themselves, you commonly won't see it in the financial pages, as far as I know.  Finally, to answer your question: ""Does knowing this single piece of information indicate something about the stock?"", I would say: not really. From the point of view of this one indicator, Pitchfork Oil and United Marshmallow look like identical investments, when they are clearly not. Knowing the average log-return is exactly the same as knowing the ratio between the final and initial prices." So ... hotdogs shouldnt count either? What about cars? gasoline? Why shouldn't one off costs count?  Virtually everything I buy is a one off cost.   New and resold houses are being sold/bought every day.  The case and shillers housing index takes attributes from common housing and amalgamates the costs. So theres your perpetual gauge if you need one.   Its striking to me that perhaps the hugest cost in most people's lives, isn't considered when calculating inflation.   No wonder the housing bubble got out of control. I suppose that there should be some sort of adjustment for inflation in the capital gains. That way those who exploit the short term volatility of the market and make money investing in real estate will be treated differently than the grandma who has lived in her house for 30 years.   I guess that is why they call inflation the invisible tax. First off, inflation doesn't necessarily imply that goods and services will rise in price.  The amount of goods &amp; services increases over time as well, and this is balanced (partly), by an increase in the money supply.  Without inflation you lose the incentive to invest, as your dollar would become more valuable over time.  Why invest in a risky venture if I know that my dollar will buy more if I just wait it out.  Might as well stick the money under the mattress. (This is bad) As the value of a currency declines, commodities, priced in that currency, will rise. The two best commodities to see a change in would be oil and gold.