Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power.
Inflation is an economic term that describes the increase in prices of goods and services over time. It is measured as an annual percentage increase. When inflation rises, the purchasing power of currency decreases, meaning that consumers can buy less with the same amount of money.
Inflation can be caused by various factors, including demand-pull inflation, where demand for goods exceeds supply, and cost-push inflation, where the costs of production increase, leading to higher prices for consumers.
“Inflation is taxation without legislation.” - Milton Friedman
Understanding inflation is crucial for making informed financial decisions, as it impacts everything from savings accounts to investment strategies.
