How does inflation devalue money over time?

Inflation is like a sneaky friend who takes a little bit of your candy every day without you noticing.

Imagine you have a piggy bank full of coins. At first, each coin buys you a piece of gum or a small toy. But over time, if inflation keeps happening, meaning prices go up, that same coin might only buy you half a piece of gum. It’s as if the value of your coins is getting smaller, even though you still have the same number.

Inflation happens when there's more money in the economy than usual, and it makes everything cost more. Think of it like this: If everyone gets a new toy every day, but the store only has so many toys to sell, prices will go up because people are fighting over the same amount of stuff.

If you save your money in a jar under your bed, and inflation keeps going up, that jar of coins might not be as useful in 10 years. What once bought you a big ice cream cone might only buy you a small one, or maybe even just the cone itself! That’s how inflation devalues money over time: it makes each coin (or dollar) worth less than it was before.