Inflation is like a hot potato you pass around. When the potato gets hotter, it burns your hand, that’s when prices go up. If no one wants to hold the potato any longer, they pass it on, and the price keeps rising even faster.
Imagine you have 10 dollars in your pocket today. Tomorrow, it feels like it only has 9 dollars because everything is more expensive. That’s inflation, it makes money feel smaller over time.
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See also
- What causes inflation, and how does it affect your money?
- How Does the Value of Money Actually Change Over Time?
- What causes prices to go up?
- Why Do Inflation and Interest Rates Go Hand-in-Hand?
- Why Do Inflation and Interest Rates Fight Like Rival Countries?