The inflation rate is a measure of the average increase in prices for a basket of goods and services. The Bureau of Labor Statistics (BLS) calculates this statistic, which is also referred to as the consumer price index (CPI). The CPI is one of many measures of inflation, and it includes the costs of things like food, clothing, housing and utilities.
There are a variety of factors that can affect the inflation rate, including increased demand and higher production costs. Higher production costs may stem from higher wages for workers, increased raw material supplies and higher energy prices. It is also possible that the rate of inflation is uneven, with some prices rising more quickly than others. This can reduce the purchasing power of individuals, especially if they are on fixed incomes.
Inflation can be harmful to consumers, but it also has some benefits. For example, if your fixed monthly mortgage payment stays the same while other costs rise, it will become easier to make that payment each month. This is why many people prefer to have a fixed-rate mortgage when they buy their home.
There are some people who are especially affected by inflation, such as seniors and those on fixed incomes. Their retirement incomes or social security checks may not keep pace with the rate of inflation, which can leave them struggling to afford basic needs and daily living expenses. This is why it’s important to track your spending and savings and take steps to adapt to rising prices if necessary.
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