Ever feel like your money isn’t going as far as it used to? Today, we’re demystifying inflation – a concept that affects us all!
Simply put, inflation is when the general price level of goods and services rises, and consequently, the purchasing power of currency falls. Think of it this way: your dollar buys less stuff than it did yesterday.
Remember when a soda cost just a dime? Now, it’s a couple of dollars. That increase over time? That’s inflation in action! It means you need more money today to buy the same items.
What causes it? Often, it’s either “demand-pull” – when too many people have money and want to buy too few things, pushing prices up. Or it’s “cost-push” – when the cost of making goods, like raw materials or wages, increases, so businesses charge more.
So, what does this mean for you ? Your savings lose value over time, and if your wages don’t keep up, your everyday living costs become higher. It erodes your purchasing power.
While a small, steady amount of inflation is normal for a growing economy, high inflation can be damaging. Understanding it helps us prepare and make smarter financial decisions for the future!