Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time. When prices rise, we can buy less with the same amount of money. This effect is known as a decline in purchasing power. 🧐 What is Inflation? Inflation is measured by indices, the most commonly used being the Consumer Price Index (CPI). It tracks the change in the price of a "consumer basket" of goods and services that a typical household buys. Often governments will pick certain goods and say that the increase is real inflation. I assure you, this is not the correct diagnosis. Main Effect: The money you have today will be worth less tomorrow. 📉 Why is Inflation the "Enemy"? Reduces Savings: If you keep your money in a bank with an interest rate of 1% and inflation is 5%, you are actually losing 4% of the purchasing power of your savings per year. Your money is nominally more, but in reality it can buy less. Fixed Incomes: The impact on individual...
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