{"id":3838,"date":"2021-03-05T02:46:17","date_gmt":"2021-03-05T02:46:17","guid":{"rendered":"https:\/\/www.ibpo.com.my\/?p=3838"},"modified":"2024-12-03T02:59:39","modified_gmt":"2024-12-03T02:59:39","slug":"how-inflation-works","status":"publish","type":"post","link":"https:\/\/www.ibpo.com.my\/bm\/how-inflation-works\/","title":{"rendered":"How Inflation Works"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"3838\" class=\"elementor elementor-3838\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-603aae4 elementor-section-full_width xts-section-stretch-content elementor-section-height-default elementor-section-height-default\" data-id=\"603aae4\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-513a4fa\" data-id=\"513a4fa\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-1436404 elementor-widget elementor-widget-html\" data-id=\"1436404\" data-element_type=\"widget\" data-widget_type=\"html.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t[xts_html_block id=\"3506\"]\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-86c14ad elementor-section-full_width elementor-section-height-default elementor-section-height-default xts-section-disabled\" data-id=\"86c14ad\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-5c446df\" data-id=\"5c446df\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-a1e5a17 elementor-widget elementor-widget-shortcode\" data-id=\"a1e5a17\" data-element_type=\"widget\" data-widget_type=\"shortcode.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-shortcode\">\t<div class=\"ibpo-articles xts-single-post-header\">\r\n\t\t<div class=\"xts-post-meta\">\r\n\t\t\t\t\t\t\t\t\t\t<div class=\"xts-post-categories\">\n\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t<a  class=\"xts-post-category\" href=\"https:\/\/www.ibpo.com.my\/bm\/category\/articles\/\" rel=\"category tag\">\n\t\t\t\t\t\tArticles\t\t\t\t\t<\/a>\n\n\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t<a  class=\"xts-post-category\" href=\"https:\/\/www.ibpo.com.my\/bm\/category\/articles\/personal-finance\/\" rel=\"category tag\">\n\t\t\t\t\t\tPersonal Finance\t\t\t\t\t<\/a>\n\n\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t<div class=\"xts-post-date\">\n\t\t\t\t\t\t\t<time class=\"published\" datetime=\"2021-03-05T02:46:17+00:00\">\n\t\t\t\t\t5 Mac 2021\t\t\t\t<\/time>\n\t\t\t\t<time class=\"updated\" datetime=\"2024-12-03T02:59:39+00:00\">\n\t\t\t\t\t3 Disember 2024\t\t\t\t<\/time>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\r\n\r\n\r\n\t<\/div>\r\n\r\n\t\t\t<h1 class=\"ibpo-articles xts-post-title xts-entities-title\">\r\n\t\t\t\tHow Inflation Works\t\t\t\t<\/h1>\r\n\t\t\r\n\r\n\r\n\t\r\n<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-60bed14 xts-scheme-inherit xts-textalign-inherit elementor-widget elementor-widget-text-editor\" data-id=\"60bed14\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<style>\/*! elementor - v3.23.0 - 23-07-2024 *\/\n.elementor-widget-text-editor.elementor-drop-cap-view-stacked .elementor-drop-cap{background-color:#69727d;color:#fff}.elementor-widget-text-editor.elementor-drop-cap-view-framed .elementor-drop-cap{color:#69727d;border:3px solid;background-color:transparent}.elementor-widget-text-editor:not(.elementor-drop-cap-view-default) .elementor-drop-cap{margin-top:8px}.elementor-widget-text-editor:not(.elementor-drop-cap-view-default) .elementor-drop-cap-letter{width:1em;height:1em}.elementor-widget-text-editor .elementor-drop-cap{float:left;text-align:center;line-height:1;font-size:50px}.elementor-widget-text-editor .elementor-drop-cap-letter{display:inline-block}<\/style>\t\t\t\t<div class=\"vc_row wpb_row vc_row-fluid\"><div class=\"wpb_column vc_column_container vc_col-sm-12\"><div class=\"vc_column-inner\"><div class=\"wpb_wrapper\"><div class=\"wpb_text_column wpb_content_element \"><div class=\"wpb_wrapper\"><div class=\"vc_row wpb_row vc_row-fluid\"><div class=\"wpb_column vc_column_container vc_col-sm-12\"><div class=\"vc_column-inner\"><div class=\"wpb_wrapper\"><div class=\"wpb_text_column wpb_content_element \"><div class=\"wpb_wrapper\"><div class=\"vc_row wpb_row vc_row-fluid\"><div class=\"wpb_column vc_column_container vc_col-sm-12\"><div class=\"vc_column-inner\"><div class=\"wpb_wrapper\"><div class=\"wpb_text_column wpb_content_element \"><div class=\"wpb_wrapper\"><div class=\"vc_row wpb_row vc_row-fluid\"><div class=\"wpb_column vc_column_container vc_col-sm-12\"><div class=\"vc_column-inner\"><div class=\"wpb_wrapper\"><div class=\"wpb_text_column wpb_content_element \"><div class=\"wpb_wrapper\"><div class=\"vc_row wpb_row vc_row-fluid\"><div class=\"wpb_column vc_column_container vc_col-sm-12\"><div class=\"vc_column-inner\"><div class=\"wpb_wrapper\"><div class=\"wpb_text_column wpb_content_element \"><div class=\"wpb_wrapper\"><div class=\"vc_row wpb_row vc_row-fluid\"><div class=\"wpb_column vc_column_container vc_col-sm-12\"><div class=\"vc_column-inner\"><div class=\"wpb_wrapper\"><div class=\"wpb_text_column wpb_content_element \"><div class=\"wpb_wrapper\"><p>Do your parents ever tell you how back in their days, a bowl of noodles cost less than RM 2.00? Why does food cost so much more now? One word:\u00a0<strong>inflation<\/strong>.\u00a0<\/p><p>Believe it or not,\u00a0<em>money can lose value<\/em>.\u00a0<strong>Inflation<\/strong>\u00a0is the rate at which the\u00a0<strong>value of currency falls<\/strong>\u00a0and as a result,\u00a0<strong>prices for goods and services rise<\/strong>.<\/p><p>Whilst mostly seen as a bad thing, it is almost inevitable that inflation will take place, what can be controlled is the\u00a0<strong>rate of inflation<\/strong>.<\/p><h2><b>What Is Inflation, What Causes It?<\/b><\/h2><div id=\"attachment_2148\" class=\"wp-caption alignnone\"><p><img fetchpriority=\"high\" decoding=\"async\" class=\"size-medium wp-image-2148\" src=\"https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/inflation-300x200.jpg\" sizes=\"(max-width: 300px) 100vw, 300px\" srcset=\"https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/inflation-300x200.jpg 300w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/inflation-1024x683.jpg 1024w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/inflation-768x512.jpg 768w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/inflation-1536x1024.jpg 1536w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/inflation-2048x1365.jpg 2048w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/inflation-219x146.jpg 219w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/inflation-50x33.jpg 50w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/inflation-112x75.jpg 112w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/inflation-942x628.jpg 942w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/inflation-750x500.jpg 750w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/inflation-1140x760.jpg 1140w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/inflation-scaled.jpg 1920w\" alt=\"What is Inflation\" width=\"300\" height=\"200\" aria-describedby=\"caption-attachment-2148\" \/><\/p><p id=\"caption-attachment-2148\" class=\"wp-caption-text\">Credits to: Marco Verch<\/p><\/div><p>So, why are you paying RM\u00a010.00 for your\u00a0<em>favourite noodle dish<\/em>\u00a0that used to cost RM 5.00 25 years ago? In simple terms, it\u2019s because RM 10.00 today is worth only RM 5.00 25 years ago\u00a0<em>(imagined figure.)<\/em>\u00a0<\/p><p>Currency loses value over time due to a number of reasons, mainly because a\u00a0<strong>nation\u2019s money supply exceeds economic growth<\/strong>.<\/p><p>Ultimately, there are\u00a0<strong>3 main factors<\/strong>\u00a0to this situation occurring: \u2013<\/p><p><i><img decoding=\"async\" class=\"alignnone size-medium wp-image-2150\" src=\"https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/supply-and-demand-illus-300x300.jpg\" sizes=\"(max-width: 300px) 100vw, 300px\" srcset=\"https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/supply-and-demand-illus-300x300.jpg 300w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/supply-and-demand-illus-1024x1024.jpg 1024w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/supply-and-demand-illus-150x150.jpg 150w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/supply-and-demand-illus-768x768.jpg 768w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/supply-and-demand-illus-1536x1536.jpg 1536w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/supply-and-demand-illus-2048x2048.jpg 2048w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/supply-and-demand-illus-146x146.jpg 146w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/supply-and-demand-illus-50x50.jpg 50w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/supply-and-demand-illus-75x75.jpg 75w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/supply-and-demand-illus-85x85.jpg 85w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/supply-and-demand-illus-80x80.jpg 80w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/supply-and-demand-illus-628x628.jpg 628w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/supply-and-demand-illus-90x90.jpg 90w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/supply-and-demand-illus-370x370.jpg 370w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/supply-and-demand-illus-750x750.jpg 750w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/supply-and-demand-illus-1140x1140.jpg 1140w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/supply-and-demand-illus-scaled.jpg 1920w\" alt=\"Supply And Demand Causes Inflation\" width=\"300\" height=\"300\" \/><\/i><\/p><p><strong><i>Demand-pull Effect<\/i><\/strong><strong>:<\/strong>\u00a0This can be caused by\u00a0<strong>strong consumer demand<\/strong>\u00a0for certain products and services. When demand increases, the\u00a0<strong>supply decreases\u00a0<\/strong>and<strong>\u00a0prices increase<\/strong>\u00a0because people will be willing to pay more to obtain the limited item or service.\u00a0<\/p><p>Demand-pull inflation tends to happen when the economy is good and unemployment is low.\u00a0 An increased supply of money leads to increased demand for goods that surpasses production capacity.\u00a0<\/p><p><strong><i><img decoding=\"async\" class=\"alignnone size-medium wp-image-2151\" src=\"https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/cost-inflation-300x300.jpg\" sizes=\"(max-width: 300px) 100vw, 300px\" srcset=\"https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/cost-inflation-300x300.jpg 300w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/cost-inflation-1024x1024.jpg 1024w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/cost-inflation-150x150.jpg 150w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/cost-inflation-768x768.jpg 768w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/cost-inflation-1536x1536.jpg 1536w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/cost-inflation-2048x2048.jpg 2048w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/cost-inflation-146x146.jpg 146w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/cost-inflation-50x50.jpg 50w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/cost-inflation-75x75.jpg 75w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/cost-inflation-85x85.jpg 85w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/cost-inflation-80x80.jpg 80w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/cost-inflation-628x628.jpg 628w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/cost-inflation-90x90.jpg 90w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/cost-inflation-370x370.jpg 370w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/cost-inflation-750x750.jpg 750w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/cost-inflation-1140x1140.jpg 1140w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/cost-inflation-scaled.jpg 1920w\" alt=\"Cost Inflation\" width=\"300\" height=\"300\" \/><\/i><\/strong><\/p><p><strong><i>Cost-push Effect<\/i><\/strong><strong>:<\/strong>\u00a0Cost-push inflation occurs when\u00a0<strong>prices increase due to increased production costs<\/strong>, such as for raw materials or wages.\u00a0<\/p><p>In this instance, demand remains constant but supply decreases, meaning\u00a0<strong>consumers shoulder the additional costs of production<\/strong>.<\/p><p><strong><i>Built-in Inflation<\/i><\/strong><strong>:<\/strong>\u00a0This is based on the expectation that the\u00a0<a href=\"https:\/\/www.statista.com\/statistics\/319033\/inflation-rate-in-malaysia\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>current inflation rate<\/strong><\/a>\u00a0will continue.<\/p><p>As the price of goods and services are expected to increase, employees will expect wages to increase accordingly to maintain a living standard.\u00a0When<strong>\u00a0prices increase<\/strong>,\u00a0<strong>wages have to rise<\/strong>\u00a0to maintain a living wage, and\u00a0<strong>the cycle continues<\/strong>.\u00a0<\/p><h2><b>Pros and Cons of Inflation<\/b><\/h2><div id=\"attachment_2152\" class=\"wp-caption alignnone\"><p><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-2152 size-medium\" src=\"https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/pros-cons-word-wooden-block-blue-surface-pointed-by-pencil-min-300x199.jpg\" sizes=\"(max-width: 300px) 100vw, 300px\" srcset=\"https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/pros-cons-word-wooden-block-blue-surface-pointed-by-pencil-min-300x199.jpg 300w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/pros-cons-word-wooden-block-blue-surface-pointed-by-pencil-min-1024x678.jpg 1024w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/pros-cons-word-wooden-block-blue-surface-pointed-by-pencil-min-768x509.jpg 768w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/pros-cons-word-wooden-block-blue-surface-pointed-by-pencil-min-1536x1017.jpg 1536w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/pros-cons-word-wooden-block-blue-surface-pointed-by-pencil-min-2048x1357.jpg 2048w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/pros-cons-word-wooden-block-blue-surface-pointed-by-pencil-min-220x146.jpg 220w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/pros-cons-word-wooden-block-blue-surface-pointed-by-pencil-min-50x33.jpg 50w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/pros-cons-word-wooden-block-blue-surface-pointed-by-pencil-min-113x75.jpg 113w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/pros-cons-word-wooden-block-blue-surface-pointed-by-pencil-min-948x628.jpg 948w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/pros-cons-word-wooden-block-blue-surface-pointed-by-pencil-min-750x497.jpg 750w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/pros-cons-word-wooden-block-blue-surface-pointed-by-pencil-min-1140x755.jpg 1140w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/pros-cons-word-wooden-block-blue-surface-pointed-by-pencil-min-scaled.jpg 1920w\" alt=\"Pros and Cons of Inflation\" width=\"300\" height=\"199\" aria-describedby=\"caption-attachment-2152\" \/><\/p><p id=\"caption-attachment-2152\" class=\"wp-caption-text\">Inflation has its pros and cons, too.<\/p><\/div><h3><strong>Pros<\/strong><\/h3><p>Inflation is\u00a0<strong>almost never good for consumers<\/strong>, but certain investors and companies. For example, inflation is\u00a0<strong>good for people who hold non-currency assets<\/strong>\u00a0like property and gold because you can\u00a0<strong>sell at higher prices!<\/strong><\/p><p>Investors in utility and energy companies might see\u00a0<strong>stock prices increase<\/strong>\u00a0too when prices increase. Companies can control the prices of their products should a surge in demand occur,\u00a0<strong>increasing profit margins<\/strong>.\u00a0<\/p><h3><strong>Cons<\/strong><\/h3><p>As stated,\u00a0<strong>goods and services will become more expensive<\/strong>, so consumers will suffer, especially when it comes to necessities such as housing, food, medical care etc.!\u00a0On the other hand,\u00a0<strong>cash, bonds\u00a0<\/strong>and<strong>\u00a0other assets<\/strong>\u00a0<strong>denominated in currency<\/strong>\u00a0will also\u00a0<strong>devalue<\/strong>.<\/p><p>Assuming built-in inflation keeps happening,\u00a0<strong>money saved today will be valued less tomorrow.<\/strong>\u00a0This\u00a0<strong>puts a dent on consumers\u2019 purchase power<\/strong>\u00a0and may even force certain individuals to change\u00a0retirement plans.\u00a0<\/p><h2><b>Deflation<\/b><\/h2><p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-2153\" src=\"https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/colourful-deflated-balloons-party-min-300x300.jpg\" sizes=\"(max-width: 300px) 100vw, 300px\" srcset=\"https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/colourful-deflated-balloons-party-min-300x300.jpg 300w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/colourful-deflated-balloons-party-min-1024x1024.jpg 1024w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/colourful-deflated-balloons-party-min-150x150.jpg 150w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/colourful-deflated-balloons-party-min-768x768.jpg 768w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/colourful-deflated-balloons-party-min-1536x1536.jpg 1536w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/colourful-deflated-balloons-party-min-2048x2048.jpg 2048w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/colourful-deflated-balloons-party-min-146x146.jpg 146w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/colourful-deflated-balloons-party-min-50x50.jpg 50w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/colourful-deflated-balloons-party-min-75x75.jpg 75w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/colourful-deflated-balloons-party-min-85x85.jpg 85w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/colourful-deflated-balloons-party-min-80x80.jpg 80w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/colourful-deflated-balloons-party-min-628x628.jpg 628w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/colourful-deflated-balloons-party-min-90x90.jpg 90w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/colourful-deflated-balloons-party-min-370x370.jpg 370w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/colourful-deflated-balloons-party-min-750x750.jpg 750w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/colourful-deflated-balloons-party-min-1140x1140.jpg 1140w, https:\/\/www.ibpo.com.my\/wp-content\/uploads\/2021\/03\/colourful-deflated-balloons-party-min-scaled.jpg 1920w\" alt=\"Deflation\" width=\"300\" height=\"300\" \/><\/p><p>Things that inflate can deflate too,\u00a0<em>that\u2019s hardly surprising is it?<\/em>\u00a0When deflation occurs, the general public\u00a0<strong>enjoys a higher purchasing power<\/strong>\u00a0as prices fall.\u00a0<\/p><p>Deflation usually happens when\u00a0<strong>money supply<\/strong>\u00a0or\u00a0<strong>financial instruments redeemable in money decreases<\/strong>. Alternatively, a\u00a0<strong>decrease in overall demand for goods and services<\/strong>\u00a0along with\u00a0<strong>increased productivity<\/strong>\u00a0may also\u00a0<strong>cause deflation<\/strong>.\u00a0<\/p><p>As an example, technological advances may\u00a0<em>increase the efficiency of companies<\/em>\u00a0in manufacturing their products,\u00a0<strong>lowering production costs<\/strong>. In turn, the\u00a0<em>saved costs are transferred<\/em>\u00a0to the consumers.\u00a0<\/p><p>However, as good as it sounds, there is a\u00a0<em><strong>downside<\/strong><\/em>. Borrowers may find themselves\u00a0<strong>returning money that is worth more than what they borrowed<\/strong>, even though the amount is technically the same.<\/p><h2><b>Conclusion<\/b><\/h2><p>Now that you understand inflation and deflation more, can you better make sense of the\u00a0<em>fluctuations of market prices<\/em>, or\u00a0<em>how money is sometimes worth more than other times?\u00a0<\/em><\/p><p>Understanding the times we are in is\u00a0<strong>hugely important to managing our finances<\/strong>\u00a0and\u00a0<strong>building wealth to overcome inflation!<\/strong><\/p><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>[xts_html_block id=&#8221;3506&#8243;] Do your parents ever tell you how back in their days, a bowl of noodles cost less than RM 2.00? Why does food cost so much more now? One word:\u00a0inflation.\u00a0 Believe it or not,\u00a0money can lose value.\u00a0Inflation\u00a0is the rate at which the\u00a0value of currency falls\u00a0and as a result,\u00a0prices for goods and services rise. [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":3839,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17,73],"tags":[33,64,102],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Understanding How Inflation Works - IBPO Group<\/title>\n<meta name=\"description\" content=\"Explore the intricacies of inflation and its impact on economies. 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