How to Save Money from Inflation
Posted: Wed Feb 19, 2025 5:22 am
If money just lies around, it loses value. You don't need to read books on economics to see this - your own experience is enough. Remember what you could buy for 1,000 ₽ just five years ago. Now this banknote is worth much less, isn't it? Inflation is to blame. If you are saving money for a big purchase or for a safety cushion, you need to protect it from depreciation. In this article, we tell you how to do this.
What is inflation
This term has two definitions that describe the same phenomenon from different angles. Inflation is:
steady growth in prices for goods and services;
gradual devaluation of money.
All this is a direct consequence of the market economy, in which belarus mobile database demand determines supply and vice versa. Economists do not know how to solve this problem and at the same time preserve market relations. As long as people buy and sell, inflation will exist.
Reasons for the rise in inflation
Prices always rise, but in a successful economy this happens slowly. Accelerated inflation rates can be caused by various reasons. We will name three of the most common:
Production cannot keep up with demand.
This often happens during transitional periods when the market is changing dramatically. A good example is mobile phones. When they became affordable, demand for cellular communications immediately increased. But mobile operators did not have time to adapt to the changing market, because there were not enough towers and free frequencies. The result was a sharp jump in prices for cellular services. This is how the economy always reacts to any shortage.
The government is lowering the key rate in response to rising prices.
This is an outdated way of solving an economic crisis, which proved its ineffectiveness in the last century. However, it is still used today - for example, in Turkey, where inflation exceeded 60% in 2022. The essence of such economic policy is tax cuts, wage increases and state subsidies. It looks like the state is protecting citizens in difficult economic conditions. But as a result, an imbalance arises between purchasing power and production volumes, and prices rise even faster.
What is inflation
This term has two definitions that describe the same phenomenon from different angles. Inflation is:
steady growth in prices for goods and services;
gradual devaluation of money.
All this is a direct consequence of the market economy, in which belarus mobile database demand determines supply and vice versa. Economists do not know how to solve this problem and at the same time preserve market relations. As long as people buy and sell, inflation will exist.
Reasons for the rise in inflation
Prices always rise, but in a successful economy this happens slowly. Accelerated inflation rates can be caused by various reasons. We will name three of the most common:
Production cannot keep up with demand.
This often happens during transitional periods when the market is changing dramatically. A good example is mobile phones. When they became affordable, demand for cellular communications immediately increased. But mobile operators did not have time to adapt to the changing market, because there were not enough towers and free frequencies. The result was a sharp jump in prices for cellular services. This is how the economy always reacts to any shortage.
The government is lowering the key rate in response to rising prices.
This is an outdated way of solving an economic crisis, which proved its ineffectiveness in the last century. However, it is still used today - for example, in Turkey, where inflation exceeded 60% in 2022. The essence of such economic policy is tax cuts, wage increases and state subsidies. It looks like the state is protecting citizens in difficult economic conditions. But as a result, an imbalance arises between purchasing power and production volumes, and prices rise even faster.