Think of a moving price tag on an average basket, rather than a price change on every item.
Go deeper
An inflation rate compares a broad price measure with its earlier level. The Consumer Price Index, or CPI, tracks prices paid by consumers for a representative collection of goods and services. Its result is an average: individual households can experience different increases because their spending differs.
Lower inflation usually means prices are rising more slowly. It does not mean that earlier price increases have disappeared. A sustained decline in the general price level is called deflation. Always identify the comparison period: a change since last month and a change since the same month last year answer different questions.
Make it concrete
Hypothetical example: a basket costing $100 rises to $106, then to $109.18. Inflation slows from 6% to 3%, while the basket still becomes more expensive.
When you read a headline
Check the index, comparison period and seasonal adjustment. A falling inflation rate can coexist with prices that remain well above their earlier level.