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Why Everything Costs More Than It Used To

Money · 10 min

Why Everything Costs More Than It Used To

Ask any grandparent what a cinema ticket cost when they were your age and watch their face. They're not misremembering, and shops aren't getting greedier. Something else is going on.

It isn't your imagination

In 1990, an average cinema ticket in the US cost about $4.20. Today it's around $11.

The film didn't get better. The seat isn't bigger. What changed is that each dollar buys less than it used to.

That slow slide is called inflation — and the number people usually quote for it, across the long run, is about 3% a year.

Inflation doesn't mean things get more valuable. It means your money gets less powerful.

Three percent sounds like nothing. It is nothing — for one year.

But prices don't rise 3% of the original price each year. They rise 3% of last year's price, which was already 3% higher than the year before. The rise compounds, exactly the way savings do.

So the price line curves upward. Same shape, same maths — just aimed at what you're buying instead of what you're saving.

Pick a weekly shop

Choose what a week of groceries costs your family today. Grey is what it costs now. Green is the extra you'd need in future years just to buy the exact same food.

Groceries today$100

5 yr10 yr15 yr20 yr25 yr

what it costs todayextra you'd need

Today $100Extra needed $109Then $209

At $100 today, the same shop costs about $181 in twenty years — and about $243 in thirty. Nothing was added to the trolley. That's the same groceries, priced in weaker dollars.

Check yourself

A $100 shop becomes about $181 after twenty years at 3%. Why isn't it $160 — twenty lots of 3% of $100?

But not everything moves the same way

Inflation is an average across everything people buy. Underneath it, some things climb much faster and a few genuinely got cheaper. Sort these by what actually happened over the last few decades.

Tap an item, then tap where it belongs

Rose faster than average

Actually got cheaper

What this does to money you're saving

Now put the two ideas together.

Money sitting in a box under your bed doesn't shrink — the notes stay exactly the same. But what they buy shrinks a little every year, quietly, without anyone taking anything.

That's why 'keep it as cash so it's safe' is only half true. It's safe from being lost. It isn't safe from inflation.

It's also the real reason saving somewhere that pays interest matters. You're not just growing money — you're trying to grow it faster than prices rise.

Check yourself

Prices rise about 3% a year. Your savings pay 2% a year. What's actually happening to what your money can buy?

What to keep

01Inflation weakens money, it doesn't improve things. Same film, same seat, more dollars.
02It compounds, just like savings. Each year's rise is taken from last year's higher price, so the line curves.
03The average hides a lot. Computers got cheaper while housing and education raced ahead.
04Cash is safe from loss, not from inflation. The real goal is growing money faster than prices rise.

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Where these figures come from

US average cinema admission was about $4.20 in 1990 and is around $11 today (National Association of Theatre Owners average ticket price). 3% a year is the commonly cited long-run average US inflation rate; individual years vary widely. Category directions (university, health care and housing rising faster than average; televisions, computers and toys falling) follow the long-run pattern in US CPI category data.