Inflation... it's going up!

Definition: Inflation is a general increase in the prices of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduction in the purchasing power of money.

Apparently (and we are NOT experts here!) there are many major causes of inflation, however, to the normal consumer in the street, inflation benefits those with fixed-rate, low-interest mortgages and some stock investors. Individuals and families on a fixed income, holding variable interest rate debt are hurt the most by inflation. As we type this, inflation is at a 40-year high, but it's impacting everyone differently. Inflation hurts poor people and those on fixed incomes the most. Right now, a worldwide increase in inflation has been attributed to various causes, including pandemic-related fiscal and monetary stimulus, supply shortages (including chip shortages and energy shortages), price gouging and the Russian invasion of Ukraine.

While high inflation can be harmful, too little inflation can also weaken the economy. When the economy is struggling and inflation is too low, governments need to take the opposite approach by lowering interest rates or buying assets to increase cash circulation. It's a delivate balance!

Listen to the podcast and read the transcript!

Inflation.pdf

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In this video, you'll learn vocabulary that will help you to read and speak about the economy. We will look at common words used to discuss economic matters, such as GDP, stagnation, fiscal, and more. These words and expressions will help you read financial news articles and follow economic reports on television and online.

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