As to why the subject should matter to you and us and everyone is because unless our incomes rise in line with inflation, it would be pretty difficult for our money to go far and buy the things we are used to – including your Friday night pizza order or even your daily cab ride to work.

Because inflation affects the price of everything around us, and savings during inflation also take a hit because of just that – that everything costs so much more. 

What causes inflation?

Inflation can be caused by or is the result of a number of factors, and the many types are usually characterised by either a root cause or the rate of increase. 

Let’s look at a few different types of inflation and what they mean;

• Cost-push: A common cause of inflation is when the costs of producing goods and services increase and push prices higher. This can happen when prices of raw materials or labor costs rise.
• Demand-pull: Another cause of inflation is when the demand for goods and services outstrips what can be produced at the time, making prices go up.

Why should inflation matter to me?

The impact of inflation is felt by everyone. As the prices keep rising, what you can buy with your money will lessen over time. Being able to combat or at least keep up with inflation and sustain the purchasing power of your money is one of the main reasons why people choose to invest their money. For better money management during inflation, it makes sense to invest.

Here are a few reasons why you should care about inflation.

The impact of inflation is felt by everyone. As the prices keep rising, what you can buy with your money will lessen over time. Being able to combat or at least keep up with inflation and sustain the purchasing power of your money is one of the main reasons why people choose to invest their money. For better money management during inflation, it makes sense to invest.

1.Savings take a hit

Since things cost more, your savings will buy less as time goes on, thus affecting your savings for the future as well. The impact of inflation may seem small in the short term, but over the course of years and decades, inflation can drastically erode the purchasing power of your savings. 

2.Inflation is inevitable

Though it can be frustrating to think about your hard-earned money losing value, most economists consider a small amount of inflation a sign of a healthy economy. A moderate inflation rate encourages you to spend or invest your money today, rather than stuff it under your mattress and watch its value diminish.

3. Consumer goods and services get more expensive

Inflation affects the price of the products you use and the services that you leverage on a day-to-day basis. Inflation can happen across all sectors, from housing and food to medical care, transportation and recreation. But the kind of inflation we are discussing, and which usually affects consumers, is the inflation that erodes their purchasing power.

4. Your salary or wage may not rise with the increasing cost of living

If you’re still making the same amount of money that you were before, you may not be able to keep up with the rising cost of living or maintain the same standard of living with the prices that keep creeping up.