Demystifying inflation: How money and politics shape our prices

I’ll never forget the day I found myself knee-deep in an unexpected conversation about gas prices, OPEC, and the value of the U.S. dollar with my young American cousin. We were catching up over lunch, and she started passionately insisting that the president of the United States controlled the price of gasoline. At first, I tried to dodge the political spin, but it quickly became clear that she was more confused about the basics of economics rather than merely repeating campaign soundbites.

What every young woman needs to know about “political” vs. “economic” inflation.

By the end of our chat, we had covered everything from how oil markets work to the types of crude the U.S. has in abundance—and ultimately why not everything that feels like “inflation” is the same as real inflation. Despite our drastically different political views, I realized that was never the real issue. The real stumbling block was economic literacy—and that can leave anyone, especially young women, vulnerable to manipulation by politicians, media headlines or even older family members.

In this article, I want to show you why understanding the distinction between “political inflation” (headline-grabbing spikes in things like gas and housing) and “economic inflation” (the broader result of monetary policy) can set you free from confusion. When you know how money and politics really shape prices, you won’t fall for political posturing, and you’ll feel much more confident about your own financial decisions.

What “political inflation” looks like

To put it simply, “political inflation” is what happens when a specific product (like gasoline, eggs, or housing) skyrockets in price and people automatically blame whoever is in power—or sing their praises if prices drop. Gas and rent take the spotlight because they affect nearly everyone’s budget in a big way.

But here’s the thing: even though politicians love to take credit when these prices go down, and absolutely hate the blame when they go up, they’re not truly in the driver’s seat. Their end goal is usually straightforward: to get votes. If claiming they “fixed” gas prices or that their rival “destroyed” the economy wins them points, then that’s what they’ll say—even if the real story is much more complicated.

Why the president doesn’t control gas prices

Take gas, for example. Politicians—yes, even the president—can influence some factors, like releasing oil from strategic reserves or shaping policies that affect drilling and refining. But global oil prices usually hinge on market demand, production decisions by OPEC, and unforeseen events like refinery shutdowns or geopolitical conflicts. If a hurricane hits a major refinery, prices can jump overnight. That’s not the president fiddling with some magical dial labeled “gas price.”

It’s supply and demand.

It’s also not in a politician’s best interest to fully “fix” a hot-button issue like gas prices, even if they could. Clear solutions often require long-term, sometimes painful policies like setting stricter standards or investing in infrastructure to boost production capacity. Politicians tend to sidestep these measures because raising taxes, restricting oil companies, or imposing new regulations can be politically risky—no one wants to lose votes. So they blame the previous administration or vow to “keep gas cheap” without truly changing anything at a systemic level.

The supply and demand story: Why goods get pricey

To understand why “political inflation” can still hit your wallet, it’s vital to grasp the concept of supply and demand. Picture a scenario: a sudden shortage of lumber drives up home-building costs, making the already tight housing market even pricier. We’re not talking about the entire monetary system pumping out cash here; it’s simply that fewer materials are available, so prices go up. The same logic applies to gas or any other product: if refiners or oil producers can’t keep up with demand—boom!—prices rise.

Yes, it looks, feels, and sounds like “inflation,” but we’re usually dealing with a limited set of goods. The price of your coffee or smartphone might not change just because lumber or gasoline got more expensive.

What’s “real” (economic) inflation?

Meanwhile, classic “economic inflation” is about the entire money supply in the country. In the simplest terms, think of it as “too much money chasing too few goods and services.” When central banks and governments stimulate the economy by injecting lots of money (through low interest rates, quantitative easing, or large public spending programs) faster than businesses can ramp up production, prices can drift upward across the board.

This kind of inflation doesn’t just spike the price of one or two items. It systematically affects nearly everything, from groceries to rent to the cost of a haircut. Economists track these changes through indexes that measure price levels in multiple categories over time. So if you see that people are paying more for just about every product or service, that’s a good sign real inflation is in play.

Empowerment is knowing the difference

The distinction matters because if you can’t tell “political inflation” from “economic inflation,” you can be easily misled. A politician might say, “Look, we brought gas prices down!” when the reality could be a global shift in oil supply or a reduced demand for travel during a recession. Conversely, if you see multiple prices creeping up month after month, but an official insists, “Everything is fine,” it could mean they’re trying to spin or ignore real inflationary pressures.

Knowing the basics arms you with the power to see through talking points, cast votes that align with your values, and make wise financial moves. When someone throws around complicated terms, you won’t be so quick to assume they’re right just because they sound confident.

Trade wars: When price hikes feel like inflation

Here’s another scenario that might look a lot like real inflation: a trade war. If a government decides to slap tariffs on imported goods—say, steel, lumber, or electronics—foreign countries often retaliate by imposing their own tariffs on what we export. Before you know it, fewer goods are coming into the country overall because they’re more expensive to import. That shrinking supply causes prices to go up domestically.

Less wood means fewer new houses can be built, so housing becomes scarcer and more expensive. Less steel could raise the cost of cars, appliances, and even canned foods. Bit by bit, the price pressure spreads across multiple industries. We might not have printed more money (the classic cause of economic inflation), but it sure starts to feel like everything is getting more expensive—exactly how widespread inflation would feel. This is why people often lump it all together and call it “inflation,” even though it’s primarily a supply shock caused by trade restrictions.

Real-world impacts on young women’s wallets

If you’re someone who didn’t study economics in college (trust me, you’re in good company!), you might see these price fluctuations—rent going up, gas and groceries getting pricier—and just assume the whole economy is spiraling. That can lead to fear-based decisions: postponing a career move, second-guessing an investment, or even casting a vote based purely on some politician’s speech without seeking the real story.

But here’s the silver lining: a little knowledge of how inflation works gives you confidence. You’ll know the difference between a politician grandstanding about lowering gas prices and the real structural changes needed to keep prices stable. You’ll recognize when trade tensions could inflate the cost of your favorite clothing brand or groceries. And you’ll feel more comfortable planning your finances, knowing that many of these issues are temporary or localized, not a permanent state of doom.

Staying informed without becoming an economist

It doesn’t take a college degree to stay on top of this stuff. Here are a few things you can do:

• Monitor the big picture. Notice if multiple categories of goods—food, utilities, rent—are consistently trending up. That might indicate real, widespread inflation.
• Keep an eye on major trade announcements. If you hear the news mention new tariffs or trade restrictions, brace yourself for potential price increases in related products.
• Know the difference between a short supply shock and a true monetary expansion. If prices spike because of a hurricane, war, or refinery issue, you might be dealing with “political inflation” that feels real in your daily life but doesn’t necessarily reflect the entire economic system overheating.
• Remember politicians’ priorities. If something they say seems too good (or too bad) to be true, ask yourself whether they might be angling for votes.

Final thoughts

At the end of the day, my conversation with my cousin reminded me that political rhetoric—left or right—doesn’t always line up with economic reality. When you don’t know how these things work, you can be played by anyone with a microphone, a campaign ad, or a flashy news segment. But when you do have a grip on the basics, you take back control of your own opinions, your money, and your peace of mind. That’s what I want for you—to feel empowered enough to cut through the noise.

We don’t have to become economists or policy wonks, but we owe it to ourselves to stay informed. When you can tell the difference between real inflation (too much money chasing too few goods) and political inflation (targeted spikes that get all the headlines), you’ll find it a lot easier to keep calm, budget wisely, and avoid being swayed by empty promises. At the end of the day, knowledge truly is power, especially when it comes to your wallet.

Disclaimer: The information provided in this article is for informational purposes only and should not be considered financial, investment, tax, or legal advice. Always do your own research and consult with a qualified professional before making any financial decisions. You are solely responsible for your investment decisions.