In my mind inflation means over time things get more expensive, due to many factors. But what does it mean when there is a % put along with it? Does this mean things are going up in price consistently by 6%?
You’re right about inflation meaning most things get more expensive over time. Inflation basically means there is more money in a country’s economy which means each dollar is worth slightly less than it was before. The value of money is diluted as more dollars enter the economy. Since each dollar becomes worth slightly less, prices gradually go up.
The practical result of this is items you could buy for $1.00 yesterday end up costing $1.05 tomorrow because each dollar holds slightly less value than it did before. Since more money is gradually introduced into the economy over time, each dollar slowly goes down in value and the prices of most items rise to compensate.
This slow rise in prices (and devaluation of the currency) isn’t a bad thing as long as it happens slowly and the changes are uniform across the economy. In other words if you get paid $10 an hour and a loaf of bread is worth $1.00 today, then next year if you get paid $11 an hour and bread goes up to $1.10, that’s a slow, gradual level of inflation where everything is moving in sync. But if you woke up tomorrow and you still made $10 an hour, but bread had shot up to $50 a loaf, that’s wildly out of control inflation.
As to the percentage measurement of inflation, this indicates how much a currency goes down in value over the span of a year. An inflation rate of 10% would suggest that the $1.00 you have today will be worth about $0.90 a year from now. An inflation rate of 1% would suggest the $1.00 you have today will be worth $0.99 in a year.
Here comes a tricky part. Prices of most items will tend to go up over time in a loose correlation with inflation. However, it’s not an exact match. There are a lot of factors which got into adjusting prices. One of these factors is inflation, but supply, demand, how rare something is, and trade speculation (people betting on whether something will go up or down in value) all factor into the price of goods and services too.
On average you’ll typically find common staples, stuff you’d purchase weekly, will go up in price roughly in step with inflation. However, bigger ticket items and items people buy rarely will often change in value in more exaggerated ways. For instance, inflation where I live is around 6% while houses have gone up in value around 30% in the past two years due to higher than normal demand from people moving into the area.
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