A thief around you

What is Inflation? How it Robs You of Your Money Every Year.

Inflation in day to day life, how inflation is being our thief and robbing out the value of money every year by 5-6%.

Inflation is a general increase in the prices of goods and services over time. Inflation makes it difficult to compare the cost of living from one year to another because, by definition, if inflation has occurred, then each item would have increased in price. The average inflation rate in America is about 2% per year compared to India has somewhere between 3to5%. inflation has an effect on the value of money. When prices go up, our money becomes worth less than it was before. This means that you have to work more hours to afford what used to cost a day's wage or just spend more money when shopping for food and gas because they've gone up too. The average person doesn't think about inflation on a day to day basis. It's only when you get your paycheck and find out that the cost of living has gone up again, or when prices at the grocery store are higher than they were last week. Inflation is an increase in the general level of prices over time; it happens when there is too much money chasing too few goods for sale, usually because people want to buy more things with what they have but don't have enough money.

You could have bought 100 pieces of chocolate 25 years ago but today with that same amount of money you may buy only 10. For example, I am in a chocolate shop and wanted to buy chocolate which cost 100 rs but I met my friend there who require that money so I gave him that money and unfortunately, the friend didn’t meet me for a long time and suddenly exactly after a year we had an encounter in the same shop he returned me the amount of money he took i.e 100 rs but now the question is can I buy the same chocolate for  100 rs after a year, your answer will definitely be you can’t buy. So this is what we call inflation the price compared to this price in the previous year, there may be lots of reasons for the rise in prices and inflation but that is the reality. 

Supposing one more example 

Last year you could buy your daily essential things for rs 10000 but in the current year it takes 10500, so here you can conclude that the purchasing power parity of the customers is reduced.

Inflation is an ever-present and ever-changing force in our lives. It impacts every single one of us on a daily basis, whether we realize it or not. The rate of inflation has risen dramatically over the past few years, robbing us blind with each passing day. Inflation can be measured by calculating the change in price for a given item over time.

Inflation is a persistent thief, robbing the value of money from every individual. This effect occurs in two ways: 1) When inflation is higher than wage growth 2) When price levels are not matching purchasing power parity (PPP). When wages increase at a slower rate than prices, it means that we have to work more hours just to maintain our standard of living. In this scenario, even if you receive an additional dollar for your salary, it would buy less.

So how can you cancel out the rate of inflation simple just manage your investments and keep a check on the yearly inflation and increase your investment as per the rate of inflation