Back in the 1950s a piece of gum was 5 cents and today it is

Back in the 1950\'s a piece of gum was 5 cents and today it is $1. Inflation has occured so that does that mean that people can afford to have less gum? Do they have less purchasing power? Explain please.

Solution

To decide this, CPI (Consumer price index) as well as Inflation levels need to be verified. Also, the standard of living there and now also need to be verified.

In one way, yes! purchasing power has gone down if the income levels have stayed constant from then to now. But that was not the case.