You must have heard about the concept of inflation from your parents or teachers. Let’s keep it simple inflation is a general rise in the price of goods and services.
An example for this is the increase in petrol price. Till a few years ago, it cost less than Rs. 40 for a litre of petrol. But today, the price has reached Rs. 70. This rise is caused by inflation, because of which, the value of goods go up.
This happens due to many reasons. Some of them can be sudden wars, high wages, uncontrolled spending by the government, or even that of families etc. But the impact falls hard on all of us. The prices of all things that you need in your daily life increases. That means, money more than what we already have, will be required to meet our expenses.
The annual rate of inflation is usually calculated in percentage. If the rate is 5 per cent, it means the price of something is 5 per cent higher than it was a year ago.