Explain · Like I'm five version
Inflation in terms of a Freddo
Why does a little chocolate frog cost more money every time you go to the shop?
Inflation is like a tiny, magical Freddo that keeps growing a little hat and a tiny coat until you can no longer afford the price of his fancy wardrobe. When the price of ingredients like sugar or milk goes up, or the cost of the big lorries delivering them rises, the shopkeeper asks for more coins. The Freddo is just doing his job by staying delicious, but his price tag is busy climbing up a very tall ladder.
It is a bit like when you try to save up your pocket money for a treat, but the treats are secretly getting bigger and more expensive while you are looking the other way. You might have had two shiny pound coins ready for a snack, only to find the Freddo has decided he is far too posh for that amount now. He sits there in his foil wrapper, looking very smug because he knows he is now worth more than a bouncy ball or a sticker sheet.
Before long, that little frog has become so pricey that you have to check your piggy bank twice just to make sure you have enough to buy him. He is still just a small piece of chocolate, but he has been busy collecting extra pennies from every child in the country to pay for his invisible top hat. It is a very polite, crunchy way to watch your money turn into something much smaller and harder to hold.
Where the analogy breaks downA Freddo is a physical item with a price, while inflation is a measure of how the prices of everything in the shops change over time.