I thought the same, too. Generally some small amount of inflation is preferable to encourage spending, rather than deflation which discourages it.

If you know a $100 item will probably cost $102 later then you're more likely to buy it now. But if that item will cost $98 in a deflationary environment, then maybe you'll wait to buy it later. Wages also tend to fall in deflation, which makes it harder to pay back debt, so lending slows down - people won't buy houses or cars, etc. Businesses hold back on capital spending. The economy slows to a standstill: if no one is spending money, how can anyone make money?

I'm not an economist, so maybe someone more knowledgeable can weigh in. But my understanding is that deflation is worse. If you can just stick $10k under your mattress and expect it to be worth 10% more in a year you have no incentive to invest. Businesses will just hold their cash, banks won't have money to loan out and the sort of investments that provide new jobs, goods and services are a risky high-effort bet compared to just saving.

A steady amount of inflation allows interest rates to be near zero or even negative in real terms without actually being negative in nominal terms. Negative (real) interest rates are sometimes a necessary policy tool (see: 2008...2021), but negative nominal rates are difficult to implement in practice in our current regime of privately-controlled money creation via bank lending.

There are other monetary schemes that allow for negative nominal rates (100% reserve-backed lending, a.k.a. The Chicago Plan, or the gold or silver standard, etc.), and in those one does not need steady inflation. There was basically no inflation for most of the 19th century, when most currencies were backed by gold or silver. That had other drawbacks: for example, a relative inability to control the money supply. An expanding money supply following the California gold rush helped fuel speculation during the railroad boom, and the inability to expand the money supply on demand exacerbated the ensuing panic of 1873. Governments at the time did not believe it was their job to dampen the impacts of the business cycle, however.

Inflation can exist because of a lot of things: natural loss of value, resource scarcity, monetary policy, greed, etc. And it's even harder to make sense of with fiat currency.

> Seemed like a vicious cycle.

The issue is inflation and deflation both tend to be positive feedback loops. Inflation can promote behavior that promotes inflation. Deflation can promote behavior that promotes deflation.

Note that I use "tend to" and "can promote". It's all based of off assumptions on how people value things and their behaviors, as is all economic models.

> why prices HAVE to keep going up

It really doesn't have to. We do so because economic models show that we should because of the way we behave. But, we also behave the way we do because of the economic systems that we've designed.

Prices have to keep going up if you want a system that promotes endless consumption and growth in consumption.

It also lets you have a "non-zero-sum" economy, where it appears everyone is making a "profit". But, in reality it isn't.

Inflation makes servicing debt cheaper which incentivizes getting loans to build things.

It also leads to those who have little bargaining power to become underpaid as they cannot negotiate higher salaries as inflation squeezes them.

part of it has do do with scarcity and gas prices. Gas is used to produce and transport. If gas prices go up, prices go up just to pay for gas. Basic supply and demand. There are more humans, more cars so the demand is higher and gas is a finite resource. Alternative energies help but gas still heavily used.

It's a vicious cycle if we get in an "inflationary spiral", but most of the time a small inflation is pretty healthy.

A capitalist society needs inflation in order to produce a desirable outcome. It is a driver of consumption, as opposed to people and organizations hoarding their money in a deflationary environment, as well as investments, because inflation leads to the devaluation of loans over time.

In the end it's really just greed. Companies always want to charge as much as they can get away with. They are constantly testing price increases to see how high they can get their prices before they start losing enough customers that it hurts their profits.

Older customers who have an idea in their mind of how much something is worth based on how much they've previously paid may eventually feel cheated and stop buying, but there's always a new generation of customers who never knew any better. There are things they can do to offset the backlash like they might offer a sale at the same time as they increase prices to give customers time to get used to the new sticker price. They keep the price the same and try to hide the fact that they're giving customers less product.

it's pretty shortsighted though because it makes our money increasingly worthless and eventually we'll end up like Zimbabwe and a loaf of bread will cost us $100.