What is inflation?

It is important for individuals to recognize inflation and the effects that this phenomenon can have on the economy. A good understanding of this concept will allow people to recognize good investments and, alternatively, scams that cheat them out of money.

Inflation is, generally speaking, a rise in the price level of goods and services over a certain period of time. This is generally caused by an increasing amount of money in an economy’s circulation, which drives down the value of each monetary unit (such as the dollar). Inflation is generally defined in percentage increase in the consumer price index over a set period of time.

Changes in the inflation rate – drastic rises, in particular – have the potential to cause a significant amount of turmoil in a country’s economy. For individuals with a fixed income, a rise in inflation means that they are seeing a decrease in their purchasing power. This has a very detrimental effect on those individuals, since they may no longer be able to pay off bills or loans on time. For those looking to retire on a fixed amount of money, inflation can completely ruin their plans. The money they have set away to get them through the rest of their lives is worth less and less as time passes.

While inflation may seem like an instigator for a swath of bankruptcy filings, that is not always the case. The entire country experiences the change in monetary value, and so everyone is affected. If companies adjust their wages in accordance with the nation’s financial situation, then people should not be seriously affected by inflation.

Contact Us

If you would like to learn more about inflation and how it can affect individuals, call the Austin bankruptcy attorneys of Slater, Kennon & Pugh Ltd.LLP today at 512-338-1100 to speak with one of our lawyers about your questions.