Inflation is a cost-of-living increase that has a widespread impact.

It refers to a continuing rise in the price of goods and services over time, or an abnormal increase in prices.

As such, inflation also affects wages, investments, and retirement plans. Understanding the causes and effects of inflation will allow you to take

steps to protect your money from this insidious financial foe. If you’re interested in learning about how to fight against inflation, read on for everything you need to know about this topic.

The rate of inflation is calculated by dividing the annual change in the cost of a basket of goods and services by the date of the base date. The basket of goods and services is updated periodically by governing bodies.

According to official statistics from Statistics Canada from January 1 through December 31, 2012 (the latest year available), consumer spending was up by $3 billion between 2009 and 2010 (about 0.3 per cent). While this may seem like small amounts by historical standards, these figures are considered important by economists because they show that consumer spending increased during periods when unemployment rates were low (i.e., before 2008). Although consumer spending has increased since then following economic growth rates that have been around 2 per cent–2.5

Section 1: Causes of Inflation

There are many causes of inflation, but they fall into two categories: demand-pull and cost-push

The demand-pull category refers to an increase in aggregate demand. It occurs when demand for goods and services pulls prices upward

When there is too much demand for a certain product or service compared to the supply of that product or service, we see a rise in the price.

When this happens in an economy, we see the overall level of prices start to increase.

This is a form of inflationary pressure.

When demand-pull inflation happens, central banks will try to control the economy by increasing interest rates.

Increasing interest rates make it more expensive for businesses to borrow money, which in turn gives businesses less incentive to invest in growing their company.

Cost-push inflation occurs when Input costs push prices upward. The input represents commodities mainly used for production (Oil, Gas, Copper, rubber, etc.)

When one or more of these things happen, the cost of producing your products goes up, and producers pass those costs on to customers, which leads to higher prices.

Cost-push inflation is often associated with recessions, but it can happen during periods of economic growth as well. In either case, it isn’t something you can control, but you can protect yourself and your company from its consequences by being prepared.

This may also be the result of a change in government policy, such as a change in the minimum wage.

Section 2 : How does inflation affect our economy?

Inflation will affect almost all factors of our economy, but it will be most apparent in the areas of employment and interest rates.

During times of high inflation, interest rates will increase as investors are compensated for the loss in value of their investment.

Costs of production will also increase, as materials and labour are more expensive. This results in higher prices for goods and services, which will also affect the economy.

Inflation will also affect individuals’ purchasing power. the purchasing power of your each individual will decrease. This means that $1 will be able to buy less in the future than it does today. For example, if inflation is 3%, a $100 item will cost $103 in a year.

 

Section 3: How does inflation affect your finances?

Inflation will take a significant amount of money out of your wallet if you don’t have a plan to fight it.

How much inflation will affect your savings depends on the rate of inflation and the rate of return on your investments.

If inflation is greater than the rate of return on your investment, your savings will lose value.

If you have debt, it will affect how quickly you pay it off.

If you are paying a fixed interest rate on your debt, inflation will make it more difficult to pay off.

If you are paying a variable interest rate on your debt, inflation will make it easier to pay off.

Section 4: How can you protect yourself from inflation?

There are a few ways you can protect yourself from the effects of inflation.

The first step is to understand the causes of inflation, so you can identify potential threats to your money.

The next step is to create a plan to combat the effects of inflation.

Inflation typically happens slowly, so it’s important to have a long-term plan to fight against it.

One way to protect yourself against inflation is to invest in assets that are expected to rise with inflation. Invest in quality investments that are expected to grow over time, such as stocks, index funds, and real estate. It’s also important to diversify your investments so that if one investment falters, you won’t lose everything.

Another way to protect yourself against inflation is to use a cash-flow calculator to determine the best strategy for repaying your debts.

A cash-flow calculator will help you determine the best way to pay off your debt, given the current rate of inflation.

Section 4: Conclusion

Inflation is a cost-of-living increase that eats away at the value of your money.

It’s important to understand the causes and effects of inflation so that you can protect your money from this financial foe.

While there is no way to completely protect yourself from inflation, there are steps you can take to minimize its impact on your finances.

Now that you know what inflation is and how it affects the economy and your finances, the best thing you can do is prepare for it.