Six things about inflation

what is inflation?

Inflation is an increase in prices of goods and services. It is measured in a unit called CPI (consumer price index). it is a yearly measurement that accounts for the growth of inflation. If inflation is mild it can actually be a good thing for the economy.

Is all inflation bad?

No, not all inflation is bad to keep the economy growing you want a inflation rate that isn't to high and isn't to low. Countries like Sudan and Belarus have an inflation rates from

40-60 % which is way to high. But other countries like Italy have inflation rates around 0.09% which is way too low and their economy is unlikely to grow.

how does it impact you?

you will have to pay more than usual for goods that you would normally get at a lower price. but you could benefit from inflation because you could be a recipient of income inflation increasing your income. The goods that inflation effects the most (by price) happens to be gas and food.

Everything inflates at different rates

If the prices of everything rose at the same speed then inflation would not be a problem, but your paychecks, groceries, and services all inflate at different rates. Sometimes there is a short time period where the government prints money but companies haven't raised prices so during this time you will have extra money to spend on goods and services.

what industries that are most affected

Air transport is one of the most effected groups, oil is very unpredictable making jet fuel extremely expensive causing prices to rise dramatically. other businesses that are effected by inflation are food, apparel, and appliance industries. an example would be cereal, when grain prices rise so does the overall cost of the cereal.

What are the three causes of inflation?

1) cost push inflation - when prices of a product rise and ultimately push the cost onto the customers.

2) demand inflation -is when people get so rich that they actually outpace the economy.

3) the government printing money - as the government prints more money the value of each dollar goes down because there is more of the same thing (less demand)