Inflation is when prices of goods and services keep increasing constantly. This continuous increase in prices reduces the consumers’ purchasing power. For example, the amount of money that lets us buy 100 things today will only let us buy 50 things in the future. So, with the same amount of money, we can’t buy as many things or services as we could before.
Example:
In August 2023, the US experienced a 3.7% increase in prices compared to August 2022. This means that the prices of goods and services, on average, increased by 3.7%. For instance, the prices of food items increased 4.3% in the last 12 months.
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