Effects of Inflation on Investing and saving!

When you hear of inflation what come in your mind is the daily news paper reports on inflation and the comments of financial big shots. You can think of inflation in two ways:

Persistent increases in the costs of goods and services

Persistent decreases in the buying power of the rupees

Inflation is the biggest culprit which decreases the value of your money overtime either way, inflation is the opposite of stable prices and over time can erode the purchasing power of your money. For example, you can buy somewhat less with 100 Rupees  today than you could have bought five years ago, and significantly less than you could have bought fifty years ago. So if you have the same amount of income each year, your purchasing power gradually shrinks.

The inflation rate varies from year to year. In India RBI and finance ministry both keeps a tab on the inflation rate. It has to be well regulated so that it doesn’t hit hard to the common man. Many factors influence the rate of inflation, from overall economic conditions and consumer spending to monetary policy and the political outlook.