All the financial experts will tell you that inflation sat at around 6.5% in 2022, but is that accurate?
If you’re in charge of your home’s grocery bill, then you know that number isn’t reflective of the true cost of goods.
Since 2019, inflation has caused crazy price increases that show no signs of stopping.
The inflation rate impacts not only groceries, but also the price of energy, your rent, and more.
Read on to learn more.
1. Inflation Means Price Increases
Inflation describes the increase in prices over a certain time. In general, higher prices puts a strain on renters, borrowers, and savers.
High inflation also dampens economic growth and general market confidence.
Inflation isn’t always a negative thing, though. In fact, select groups enjoy various benefits from inflation.
Banks, the energy sector, and investors make money during high inflation.
In general, the higher the prime interest rate, the bigger the profit for lenders.
2. Inflation Is Measured Based On CPI
You may be wondering how inflation gets measured. A very basic explanation is that it depends on the average consumer’s cost of living. These expenses include things like:
- Rent or mortgage costs
- Food prices
- Energy costs
The change in these costs over a year is consumer price inflation (CPI).
3. Inflation Decreases The Value Of The Dollar Over Time
Did you know that the US dollar isn’t backed by any commodity?
When commodities become more expensive, that makes your dollar worth less.
Over time, inflation has caused the value of the dollar to plummet.
Since 1914, the US dollar has lost 97% of its value.
4. Inflation Is Caused By Bad Monetary Policies
With all this talk, you’re likely wondering — what causes inflation?
According to the International Monetary Fund, it’s caused by bad monetary policy.
When the money supply outgrows the economy of a country, the value of that currency will decrease.
A failure to maintain a good balance will inevitably cause long periods of inflation.
5. Inflation In 2023
After learning everything in this inflation guide, do you think inflation will go up? If you guessed yes, then you’re likely right.
Many people are watching the world economy right now. Some say that a depression is likely, while others deny a recession is on the way.
Regardless of where you fall, economic growth will slow down in 2023.
With slower growth and the ongoing Ukraine conflict, finances are tight.
The IMF and WEF tend to believe inflation will fall, but it’s still expected to be very high.
Unless a new top-tier global monetary policy emerges, the economic outlook isn’t great.
Pay Attention To The Inflation Rate In 2023
If you want to make money in 2023, then it’s in your best interests to get informed about inflation.
In early 2023, it’s expected that the Fed will keep increasing the interest rate.
In general, the inflation rate moves with the interest rate.
While many say we aren’t headed toward a recession, market signals say otherwise. More inflation means everything will cost more.
Are you interested in learning more tips and tricks on how to handle the current market? Head over to our “make money” section to see more of our best articles and advice.
As the economy continues to recover from the pandemic, there is an increasing focus on the inflation rate in 2023.
The inflation rate is a critical economic indicator that can have a significant impact on the overall financial health of individuals, businesses, and countries.
Understanding and monitoring the inflation rate in 2023 will be vital for investors and business owners as it can influence their decision-making.
It is important to pay attention to how various factors such as government policy, exchange rates, commodity prices, and economic growth affect the inflation rate as these factors can have a direct impact on investment returns.
For individuals who are planning for retirement or saving for college tuition fees, understanding how their investments are affected by changing inflation rates can help them make better decisions with their money.
Tracking the rate of inflation in 2023 will be key to ensuring that they are able to maximize their wealth over time.
As the global economy continues to open up in 2023, it will be important for investors and businesses to pay attention to the inflation rate.
Inflation is an economic term used to describe the rise in prices of goods and services over a period of time.
A high inflation rate can have a significant impact on an economy as it erodes away people’s purchasing power and can lead to higher unemployment.
This can cause a ripple effect that impacts the stock market, housing prices, and other sectors of the economy.
It is important for investors, business owners, and consumers alike to understand how inflation works and how it affects their investments so they can plan accordingly.