Inflation Dynamics

Inflation dynamics refer to how prices of goods and services change over time due to various factors. When demand for products exceeds supply, prices rise. Conversely, if supply grows faster than demand, prices can fall. Other influences include production costs, government policies, and global economic trends. Inflation can erode purchasing power, meaning money buys less than before. Central banks often adjust interest rates to control inflation: raising rates can cool the economy and lower inflation, while lowering rates can stimulate spending and boost demand, potentially increasing inflation. Understanding these patterns helps us navigate economic changes.