#3- Prices & inflation

Hey friends!

Welcome back to Finance at your Fingertips. In this week's blog, we'll be talking all about Prices and Inflation. If you'd like to unlock your inner investor, continue reading for some useful tips and tricks :)

WHAT IS INFLATION?

Inflation is simply a measure of the increase in the price of goods/services overr a time period (typically one year).

MEASURING INFLATION

The Consumer Price Index (CPI) gives an indication of inflation. This index measures the average percentage change in the prices of goods or services 'consumed' by a household.

CAUSES OF INFLATION

• COST PUSH INFLATION

This occurs when the supply of goods or services is limited but demand remains the same, which causes an increase in the cost of goods and services.

• DEMAND PULL INFLATION

This is the tendency for prices to increase due to an increase in the amount of goods and services the entire population buys.

• WAGE PRICE SPIRAL INFLATION

Inflation that occurs when there is a rise in wages causing an increase disposable income (income after taxes are deducted), raising the demand for goods and causing prices to rise.

FACTORS AFFECTING PRICES🤔

• COST OF PRODUCT

• DEMAND OF PRODUCT

• COMPETITORS' PRICES

• REGULATIONS FROM THE GOVERNMENT

KEY FACTS

• Inflation is a measure of the rate of rising prices of goods and services in an economy.

• Inflation can occur when prices rise due to increases in production costs, such as raw materials and wages.

• A surge in demand for products and services can cause inflation as consumers are willing to pay more for the product.

• Some companies reap the rewards of inflation if they can charge more for their products as a result of the high demand for their goods.

That's it for today folks! We hope you learnt a little about prices and inflation!

Be sure to check us out soon for our next installment in our Finance Fridays series!

Until then, "Let's be like Krabs, and get that bag"🤑