Understanding Inflation: The Good and the Bad

Inflation can be a bit confusing!

Let’s break it down into two main sides: the good and the bad.

Positive Effects of Inflation:

• Encourages Spending: When people see prices going up, they tend to buy things now instead of waiting.
• Reduces Debt Burden: If you owe money, inflation can help. That’s because the money you owe is worth less over time.

Negative Effects of Inflation:

• Erodes Savings: If prices rise too quickly, the money you’ve saved loses its value.
• Uncertainty: When inflation is high, businesses might think twice about investing their money.

Finding a balance is important! Too much inflation can cause problems, but a little can help keep the economy moving.