It not just simple supply/demand.
The primary cause of (real, i.e. adjusted for buying power) long-term inflation is the growth of the money supply. It appears that people have more money than ever before. When this happens faster than the expansion of the economy, the result is too many gil chasing too few goods and materials (services too). Thus each gil's purchasing power is less than before.
There are other causes of price increases, like the way the price of oil going up and down causes fluctuations in the price of gasoline. But effects like these are smaller and temporary, and they cause both upward and downward pressure on prices. The only big and permanent cause of inflation is money growth.
Perhaps the reason why SE increased the taxes is to reduce the overall money supply. Thus, trying to stem this inflationary trend.
*edit* I forgot to mention that as more people quit, the economy is actually shrinking while the money supply rises. These peopple who quit, liquidate their assets and give/sell them to others. With less people, there is a smaller economy. However, their gils are still on the server and perpetuating inflation.
hehe, good times... let me buy HQ gear for each lvl until about 20 hehe.
