High inflation leads to more frequent price changes, impacting consumer wallets.
The article examines how prices are set in Mexico during periods of low and high inflation. When inflation is low, price changes are not strongly influenced by inflation because decreases in prices balance out increases. However, when inflation is high, there are more price increases than decreases, leading to a stronger link between price changes and inflation. A simple model accurately predicts the frequency and size of price changes across different inflation levels.