How inflation works | CNBC Explains?

Inflation is when money loses its value, like your favorite candy gets more expensive every day.

Imagine you have a piggy bank full of coins. You use it to buy toys at the store. One day, you notice that instead of 10 coins for a toy, you need 15 coins. That’s inflation, the same toy now costs more money because the value of your coins has gone down.

Think of the store as a bakery. If the baker buys flour and sugar for more money, they have to charge you more for bread. Inflation is like that: when everything gets more expensive, flour, toys, gas, even pizza, it’s because the price of things has gone up.

If your piggy bank has 10 coins, and a toy costs 15 coins now, you might need to save longer or ask for more allowance. That’s how inflation affects kids, parents, and even grown-ups, it makes everything cost more over time.