What is inflation and how does it hit you?

We are already accustomed to hear the term inflation in the television headlines daily, however not always the subject matter is understood, and mainly, it is not known how this can affect us directly. Thinking about it, this article will explain what it is, how it works and the consequence of inflation in your pocket. Check out.

What is inflation?

What is inflation?

In a very simplified way, inflation is the rise in prices, that is, an “X” product that cost R $ 10 reais today and suffered an inflation of 20%, tomorrow the same product will cost R $ 12 reais. When one hears that inflation is at zero, this means that prices are stable.

Thus, with the increase of prices, purchasing power reduces, therefore, the worker’s salary does not follow inflation prices.

Why does inflation happen?

Why does inflation happen?

There are three reasons that lead to inflation:

  1. Government releases large amount of money
  2. Inability to produce high demand products
  3. Higher production cost

In some national territories the absence of rain is also responsible for causing inflation, which raises the cost of food.

How can inflation affect you?

How can inflation affect you?

Inflation is most felt when shopping at the supermarket, since the price of products increases and salary does not accompany this growth. In practice, inflation causes you to have more money to buy the same products as you usually bought.

So either you spend more to buy the same amount of products or you need to reduce the amount of purchases.

What to do when inflation is abusive?

When inflation tightens, there is nowhere to get away, but note some tips:

– In grocery shopping, you prefer vegetables, vegetables and fruits of the season, because they are more in account;

– Buy just the necessary, expect inflation to reduce to buy expendable products;

– Beware of debts, avoid them to the maximum and try to renegotiate old debts.

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