Reduced Purchasing Power

As prices rise, your money buys less than it did before. This can affect your ability to afford everyday necessities like food, housing, and transportation.

Erosion of Savings

If the return on your savings does not keep pace with inflation, the real value of your savings decreases. Money left in low-interest savings accounts or cash loses value over time.

Higher Cost of Living

Inflation leads to an increase in the cost of living, making it more expensive to maintain the same standard of living. This affects budgets and financial planning.

Impact on Investments

Inflation can erode the real returns on investments. Fixed-income investments like bonds may not keep up with inflation, while certain assets like stocks and real estate might offer better protection against rising prices.

Debt Impact

Inflation can have a mixed effect on debt. While it can reduce the real value of fixed-rate debt, making it easier to repay, it can also lead to higher interest rates, increasing the cost of borrowing.