Co-blogger David Henderson usefully mentioned the publication of an interesting book edited by Ryan Bourne, The War on Prices. The authors, of which I am honored to be part, also include  Brian Albrecht, Pedro Aldighieri, Nicholas Anthony, David Beckworth, Ryan Bourne, Eamonn Butler, Vanessa Brown Calder, Michael Cannon, Jeffrey Clemens, Bryan Cutsinger, Alex Edmans, Peter Jaworski, Deirdre McCloskey, Jeffrey Miron, Liya Palagashvili, Joseph Sabia, J. R. Shackleton, Peter Van Doren, and Stan Veuger. The book provides a wide-ranging review of the essential role of prices. (By initiating and coordinating this effort, Ryan achieved a remarkable feat.)

My own article, titled “A Rising Product Price Doesn’t Cause Inflation” (pp. 19-27), focuses on the crucial distinction between relative prices and inflation. A few excerpts:

We must clearly distinguish the two different phenomena: relative
price changes and changes in the general level of prices.

A relative price is the price of one good in relation to the price
of another.

Inflation is an increase in the price of all goods in terms of money.

The general price level (and thus inflation) is not technically observable as such and must be estimated, typically through some weighted average of observed individual prices, like in the CPI. But we must keep in mind the difference between what we are attempting to measure and its calculated estimate.

In the presence of inflation, the change of a given price will include both its relative change (without inflation) and the effect of inflation.

If an observed price—say, the price of roast beef or of gasoline—comes from both a relative price change and inflation, the observed price cannot cause inflation.

The CPI and similar indexes can be useful indicators of, or alerts to, inflation, but only if we realize their inherent limitations.

It is important to realize that inflation is a monetary phenomenon that has nothing to do with the supply-chain fetish. The misleading supply-chain explanation provides an excuse for central governments to inflate the money supply in order to finance their self-interested interventions.

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The supply-chain fetish

The supply-chain fetish, by DALL-E and P.L.