Inflation is all over the news and it’s making headlines. Since investors have not seen the increase in prices for the past years, it is worth the time to review and analyze the effects of inflation in the economy and country as a whole.
Inflation is the decrease in currency’s purchasing power as a result of price hike across the country and economy as a whole.
Going down the memory lane, the cost of average cup of coffee was just a dime. But fast forward to present, its total cost is now up to 2 dollars.
This price change may conceivably result from the sure in high popularity of coffee or the price pooling made by suppliers or coffee or the years of drought, conflict or flooding in regions where coffee-growing is the primary industry.
Threading against the Tide
One of the expected responses to the declining purchasing power is to keep on spending. Cash will constantly lose value. Therefore, it is wiser to shop out of the way then, stock up on things that will not lose on value. Sad thing is that, the urge to invest and spend in wake of inflation only tends to amplify inflation. As a result, it is creating devastating feedback loop.
This is something that calls for real leaders to stand up and lay down the best solutions for their countrymen.