Inflation is the rise in the cost of goods and services. Inflation definitely has a negative impact on purchasing power. Are there those who benefit from this process?
Who loses from inflation
Inflation leads to the depreciation of the money of the population and a decrease in their purchasing power. As a result, money loses part of its real value, and in the future it will be possible to buy fewer goods and services than before. So, with inflation of 10%, in 10 years all accumulated funds will completely depreciate and turn into ordinary pieces of paper that have no value.
Inflation is an average indicator; it does not mean an increase in prices for all goods and services. At the same time, the cost of individual goods and services may rise, fall, or remain unchanged.
For most of the country's population, inflation is a negative process. Those who are losing out on inflation include fixed income citizens, bank depositors, creditors and entrepreneurs.
Thus, the first highlighted category has to earn more in order to maintain the previous standard of living. They need to increase their income by at least the inflation rate.
For example, a person with a salary of 30 thousand rubles. with an annual inflation rate of 10%, it is necessary to earn 33 thousand rubles next year. to maintain the current consumption level.
In a particularly difficult situation, those who do not have the opportunity to increase their own income, for example, pensioners, find themselves in a particularly difficult situation. It should be noted that in Russia the pension is annually indexed to the official inflation rate. At the same time, the cost of goods and services that are most important for pensioners (for example, food and housing and communal services) can grow at a faster pace, and for other goods - to a lesser extent. Thus, the increase in pension will not cover the real decline in purchasing power.
Inflationary processes will also hit depositors with fixed-rate deposits. In Russia today, most of the interest rates on deposits do not cover real inflation.
Those who borrow money are also in a disadvantageous situation. creditors. But only if the interest on the loan does not cover the inflation rate.
For entrepreneurs, inflation makes it difficult for business planning and pricing.
Who Benefits From Inflation
But there are also those who benefit from inflation. These are, for example, borrowers who pay off the loan with cheaper money. Although most banks initially include inflationary risks in the interest rate.
Business owners in the service sector can also benefit. For example, legal agencies, repair and finishing companies, hairdressing salons, etc. If an entrepreneur raises prices for services, while maintaining a constant salary, he receives additional income. In the trade and manufacturing sector, where profits depend on the cost of raw materials (purchased goods), the effect of inflation may be less pronounced.
The positive effect of inflation is also experienced by those who work at enterprises that increase wages at a faster pace during the period of inflation.
