What is inflation and what causes it?

Inflation is a general increase in the price level of goods and services in an economy over a period of time. In other words, it means that the purchasing power of a currency decreases, leading to higher prices for consumers. Inflation can be caused by a variety of factors, including an increase in the supply of money in circulation, higher production costs for businesses, or an increase in demand for goods and services without a corresponding increase in supply. Government policies, such as changes in interest rates or fiscal policies, can also affect inflation. High inflation can have negative effects on an economy, such as reduced purchasing power, increased borrowing costs, and decreased economic growth.

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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