Read Aloud the Text Content

This audio was created by Woord's Text to Speech service by content creators from all around the world.

Text Content or SSML code:

Inflation on the market: what is it and why should you care? Inflation is one of those difficult financial topics that many people think they understand, but in reality many are lost when it comes to the specifics. But understanding inflation can help you make better decisions about your finances, so it’s important to make sure you have a full grasp of what it is and why it matters. Here’s what you need to know about inflation on the market and how you can protect yourself from its effects. What Is Inflation? Inflation is a rise in prices, which can be translated as the decline of purchasing power over time. In other words, when there's more demand for products and less supply of those products: individuals actually need diversified products and services for living a pleasant life (i.e. food, metals, fuel, utilities, etc.) and the prices rise means that units of money can buy fewer of those goods and services. What Causes Inflation and How Can We Identify It? Inflation can be caused by many factors (as the increase of the demand) and leads to money losing its related purchasing power. The most common way to measure inflation in developed countries like Canada is with a Consumer Price Index (CPI) that tracks changes in prices of consumer goods, such as food, transportation, shelter, clothing and entertainment. Economists use this index to compare how fast prices are changing from one period to another. How Does Inflation Affect Our Finances? An inflation rate of 10% means that prices are increasing at a rate of 10% per year. This can be problematic because if wages don't rise at the same rate as inflation, then people will have less money to spend on goods than they did before and as it can erode the value of their holdings and impose significant costs on economies. Ways to Prepare For Possible Inflation: The best hedges against inflation are considered to be stocks, the special financial instruments that are indexed to inflation and gold.