Inflation is basically a rise in prices. Families, businesses and govt groups are all buyers. During inflation people spend money much faster than the goods are being made. It is a situation where too many money chases too few goods. Even if we knew the causes for inflation, we might not be able to avoid it from happening. Sometimes governments, businesses, labor unions and many others are blamed for inflation. It might also come because of a war. In inflation, steady rise in prices cuts back the amount that a dollar will buy. Then people hurry to buy before costs get any higher. Then businessmen think there is growing demand for their products and thus put more money in business to grow it. This creates demand for workers. People get bigger incomes and they spend more money. The people who mainly suffer during inflation are the savers, creditors, people on pensions and those who earn fixed income. Inflation is basically a rise in prices. Families, businesses and govt groups are all buyers. During inflation people spend money much faster than the goods are being made. It is a situation where too many money chases too few goods. Even if we knew the causes for inflation, we might not be able to avoid it from happening. Sometimes governments, businesses, labor unions and many others are blamed for inflation. It might also come because of a war. In inflation, steady rise in prices cuts back the amount that a dollar will buy. Then people hurry to buy before costs get any higher. Then businessmen think there is growing demand for their products and thus put more money in business to grow it. This creates demand for workers. People get bigger incomes and they spend more money. The people who mainly suffer during inflation are the savers, creditors, people on pensions and those who earn fixed income.
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