How does inflation work?

Inflation refers to the rate at which the overall price level of goods and services in an economy is increasing. It is measured as the percentage change in a price index (such as the Consumer Price Index) over time. Inflation can be caused by a variety of factors, including increases in the money supply, changes in government policies, and shifts in global demand for goods and services. Central banks, such as the Federal Reserve in the United States, use monetary policy tools (such as interest rates) to try to control inflation and maintain price stability. High inflation can lead to economic problems, such as decreasing purchasing power and uncertainty for businesses and consumers.

The effects of inflation are often not directly felt but are played out over a long time, especially long-term investments are vulnerable to inflation.


At Horizon65, we created a mobile app that enabled you to check the effect of inflation on your savings.

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