Inflation is an increase in the cost of goods and services. Definitely inflation negatively affects purchasing power. Are there any who benefit from this process?
Who loses from inflation
Inflation leads to a depreciation of the money of the population and a decrease in their purchasing power. As a result, money loses part of its real value, and in the future it will be possible to buy fewer goods and services for them than before. So, with inflation at 10% after 10 years, all accumulated funds will completely depreciate and turn into ordinary pieces of paper that have no value.
Inflation is an average indicator; it does not mean an increase in prices for all goods and services. At the same time, the value of individual goods and services may increase, decrease or remain unchanged.
For most of the country's population, inflation is a negative process. Among those who lose out on inflation, we can distinguish citizens with a fixed income, depositors in banks, lenders and entrepreneurs.
So, the first distinguished category has to earn more to maintain the previous standard of living. They need to increase their income by at least inflation.
For example, a person with a salary of 30 thousand rubles with an annual inflation rate of 10%, it is necessary to earn 33 thousand rubles next year to maintain current consumption levels.
In a particularly difficult situation, those who do not have the opportunity to increase their own income, for example, pensioners, are having it. It is worth noting that in Russia the pension is indexed annually at the official inflation rate. At the same time, the cost of goods and services that are most important for pensioners (for example, food and utilities) can grow at a faster pace, and to a lesser extent for other goods. Thus, raising a pension will not cover a real drop in purchasing power.
Inflation processes will also hit investors with fixed-rate deposits. In Russia today, most of the interest rates on deposits do not cover real inflation.
In a disadvantageous situation are those who borrow money, i.e. lenders. But only if the interest on the loan does not cover the level of inflation.
For entrepreneurs, inflation makes it difficult to plan business processes and pricing.
