What causes inflation and why does it make goods more expensive?

Inflation is when money loses its power, making things you buy cost more over time.

Imagine you have a piggy bank full of coins, and you use it to buy your favorite candy every week. One day, the store says, “We’re raising our prices!” Now, instead of 10 coins for one candy, it takes 20 coins, even though the candy looks exactly the same. That’s like inflation: more money is needed to buy the same thing.

Think of the piggy bank as a group of people who are all trying to buy things. If everyone wants to buy candies at the same time, the store might say, “We can only give out so many candies!” So they raise prices, just like when you and your friends all want the last piece of cake.

Sometimes, more money is printed, like adding more coins into the piggy bank. If there are too many coins around, each coin becomes less special, it’s like having 10 candies but needing 20 coins to buy one. That’s how inflation can make goods feel more expensive over time.