“Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling”
So for instance….
So if you notice, whilst between 2015-16 it would be reported that inflation has fallen, the actual price and or cost has still gone up!!
Lets take a look at wages. Whilst there was 5% pay rise in 2015-2016 (£100 => £105) and 2016-2017 (£105 => £110.25), because there was no rise in 2014-2015 to match price increases, by 2017, the person is suffering lower living standards!! Why because between 2014-2017, cost of living rose by 11% and wages by 10.25%!!
Note of caution, when looking at such figures, always be aware that the choice of ‘Base year’ could also distort your perception of the rising costs.
Basically if there is a shortage/ insufficient supply compared to demand…
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