Inflation and Your Money: Definition of Inflation

Inflation and Your Money: Definition of Inflation

There are several inflation related questions we ask ourselves every day.

“Last year, I bought this same Beverage – Milo – for N800, now it’s N1,200, what is happening to money?”

“Why does the price of things keep going up on a daily basis?”

“Who is controlling these prices?”

These are questions we ask ourselves every day.

There are several factors that control the cost of Commodities in the market including the Forces of Demand and Supply, Government regulation, etc.

But in this article, I want us to focus on INFLATION.

Over the next few days, I am going to dissect the issue of Inflation in toto so that you will NEVER be confused anymore.

Thereafter, I will move on to another Financial term that will help boost your Intelligence.

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What is INFLATION?

Investopedia defines Inflation as “the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of a currency is falling.”

It is the sustained increase in the general price level of goods and services in an economy over a period of time leading to an increase in the cost of living.

Essentially, what this means is that a certain amount of money is going to buy less and less quantity of goods and services as time goes on

Inflation affects not only the economy but also your Savings in the Bank, your Business, your budget and indeed everything that has to do with your finances.

The opposite of Inflation is Deflation.

Inflation is when prices are rising, while Deflation is when prices are falling.

These two factors affect certain asset classes in various ways.

That’s all for the definition. Next, we’re going to consider:

the causes of inflation and the theories that define it.
✓how inflation affects the prices of goods and services
✓how inflation eats into your savings
✓Positive and Negative Effects of Inflation
✓How to Protect your money from Inflation
✓and lots more.

If you have any question feel free to ask in the comments below.

Tell me….. Are you liking this series we’re about to start?

Is it going to help with your Financial Literacy?

I really want to hear from you…

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Obot Essiet Jr.

I am an Architect, Entrepreneur and a Financial Intelligence Coach. I help set people on the right path to Financial Freedom by internalising financial literacy. I love cycling, reading and playing chess.

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