What is inflation?

There has been alot of buzz around Inflation and the cost of living recently, however what actually is Inflation and what causes it?

Inflation is a measure of the rate at which the prices of goods and services in an economy are rising. When inflation occurs, the purchasing power of the currency decreases, meaning that the same amount of money can buy fewer goods and services.

Inflation can be caused by a number of factors, including an increase in the money supply, an increase in demand for goods and services, or a decrease in the supply of goods and services.Inflation has a significant impact on the economy, affecting consumers, businesses, and governments alike.

High inflation can reduce the value of savings, decrease the affordability of goods and services, and lead to a decrease in the standard of living. Additionally, inflation can have an impact on interest rates, investment decisions, and the overall stability of the economy.

Governments and central banks often use various policies and tools to manage inflation and maintain economic stability, such as controlling the money supply, setting interest rates, and implementing fiscal policies. By keeping inflation under control, economies can maintain a stable environment for growth and development.