The inflation that grips us: how to define it?
Inflation is a word that has crept into our daily lives. And it doesn’t exactly affect us in a positive way. But what exactly is inflation and how does it affect us? Agent 11Onze Miriam Frías gives us a summary.
“Inflation is the generalised rise in prices sustained over time,” Frías defines just for starters. In fact, inflation comes from the word “inflate.” And why? Simple, because the prices of basic goods increase. So inflation affects the most common household expenses: the shopping basket, the cost of supplies, the price of household appliances… As a result, there is a loss of purchasing power.
But why does inflation occur? There are three main causes, Frías says. The first is due to consumption or demand, i.e. when there is a high demand for a product in excess of its supply, prices tend to rise, because the people who need that product will be willing to pay any price.
Secondly, production costs, i.e. when raw materials, such as energy or oil, rise, then manufacturers have to guarantee themselves a percentage profit and pass this price increase on to the consumer. And the last one, self-constructed inflation, in which, when prices are expected to rise, manufacturers raise prices progressively so that the impact is not so great in the long run.
Want to know all about inflation? Just watch the video below!
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