Villagers never discount, and often because of a variety of reasons to increase prices substantially, even if I did not attack them ... I hope that after a long period of trading, the villagers should also give the player a moderate discount, even if the player does not have a village hero effect
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Villagers will increase price after trading for an item. Price will fall back to original / previous level if don't trade for that item for a particular time period (one restock I think), otherwise if keep trading the price will continue to increase. As far as I know, the price never falls below the original value except if Hero of the Village is in effect.