Inflation vs. Price Elasticity

Have you ever noticed how we push back against inflation, but still keep buying certain products

even when prices go up? Take the iPhone. Prices keep rising, yet demand barely

changes. Compare that to products like Peloton, where prices went up and demand fell

quickly because customers had plenty of alternatives. The difference comes down to price elasticity.

That is how willing customers are to walk away when prices rise. When demand is less

sensitive to price, people keep buying even as prices increase. This usually happens when substitutes

are limited, switching costs are high, or the product is deeply embedded

in daily life. Inflation helps explain why prices rise broadly. Elasticity helps