Why you should care about the impact of inflation

Julie Brownlee, Fsp Invest, 17 Mar. 2015

Tags: inflation, consumer inflation, what is inflation, impact of inflation, inflation and savings, real interest rates, interest rates,



Tomorrow, Stats SA will release its consumer inflation data for February.

So what is inflation? And why should you care about the current rate of inflation?

Read on to find out…



What is consumer inflation?


In South Africa, the consumer price index (CPI) measures consumer inflation. Stats SA are responsible for measuring the data and publishing it on a monthly basis.

Stats SA measure the changes in price of a number of different goods and services that consumers buy and use. In other words, Stats SA try to measure how the cost of living changes on a monthly basis for Mr Average.

Of course, chances are your spending behaviour will be different from the one Stats SA bases its calculations on, but the rate of inflation gives you a way of measuring the changes in the cost of living.

Over the past few months, inflation has fallen thanks to the sharp drops in the petrol price and moderating food prices.


Why you should care about the current rate of inflation


The current rate of inflation will have an impact on your life. If inflation is rising rapidly, you’ll notice that products you buy or services you use will rise in price.

When inflation is rising, your rands won’t go as far as they did before. It will dent the money you have in your pocket.

Inflation also has an impact on the cash you hold in the bank. If you have money in a savings account for example, rising inflation will eat into the amount of interest your cash is actually making.

For example, let’s say you have R10,000 in the bank. If you’re earning 5% in interest on your savings and the current rate of inflation is at 3%, you’re actually making 2%. This is the real interest rate (rate of interest – rate of inflation).

On the other hand, if inflation rises to 6% and you’re still earning 5% in interest, you’re losing money. Your cash in the bank is losing its spending power.

So there you have it, why you should care about the impact of inflation.

*********** New release ************

Are you finally serious about becoming wealthy?

Because the strategy I’m about to show you could make you A LOT of money and the best part is…

You DO NOT need a ton of money to start with.

You DO NOT need to spend all day in front of a computer.

And you DO NOT need a ‘miracle’.

All you need is the special strategy I use to pinpoint the fastest and highest rising companies on the JSE over and over again.

Click here to find out more…

**********************************


Related QA

Pic
Maxhakane asked:
I was dismissed in April and i cannot afford to pay the loans I had with FNB as I'm now earning only UIF. My loan instalments amounts to R6000 a [read more]
Published at 03 Sep. 2016 in: Personal Finance 1 Answer
Pic
jeffzoraunye asked:
I would like to know where i can buy cages for quail farming [read more]
Published at 04 Jan. 2016 in: Personal Finance Entrepreneurship 1 Answer
Pic
willem2234 asked:
For a novice such as me, this platform is really complicated. They send me a training manual (to a elderly novice) and this is a few pages. It is [read more]
Published at 23 Dec. 2015 in: Personal Finance General 1 Answer
Pic
willem2234 asked:
At present you are running a series by Mark Ford. In one of his lessons on how to save money, he says that one of the first things to do is to cut-up [read more]
Published at 23 Dec. 2015 in: Personal Finance Genaral question 1 Answer
Pic
d.c.heger asked:
Is there any way one can hold shares privately without paying the monthly A/C Admin fee and only paying the Broker fees when buying or selling. [read more]
Published at 15 Dec. 2015 in: Personal Finance Broker fees 1 Answer

Related articles:


Latest:

Comments
0 comments



 
 


Youtube Twitter Facebook

Connect with us:    

POPULAR TOPICS
  • Accelerated Investor
  • Accessories
  • Accountancy