An inflation rise is much more harmful to anyone than a declining market (equity, stock, crypto), Inflation slowly causes problems for normal people as it affects the cost of living for us. Inflation rise is a big problem and mostly we don't care much about it and with time we get difficulties.
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Inflation
Inflation is an increase in the prices of products over a year but the value of your money reduces. This means if you are buying the product at 100 rs in the year 2021 and the inflation rate could be around 6% then the same product costs 106 rs in the year 2022. Here you have to pay 6 rs. extra but you only have 100 rs. This is how inflation affects people. But if you would have invested that money then you could have earned more than 6% on that amount. So this way you could successfully beat inflation. Inflation is a much broader concept.
There are many reasons for inflation. If the demand for product increases then obviously the price of that product will increase and cause inflation. Also, if there is a price increase in raw materials then it will directly affect product prices which are made using these raw materials that lead to inflation. An increase in the salary of employees can cause inflation. But the most severe inflation problem can occur because of the high number of printing cash by the government. It is called currency depreciation. High inflation can decrease unemployment, hence this way it's positive. But still, in other cases, it is not. Inflation should be maintained then only it can work in a positive way. Also, a 0% inflation rate is not good for any country. Because it has some disadvantages too. Hence, inflation should not be too high or too low (around 0%).
Inflation causes bigger issues for middle or low-income people. So, for the betterment of people in the country, there is a high need to reduce inflation. If inflation increases rapidly in any country, it directly affects the economic growth of the country. To control Inflation rise government must have to take some action.
It seems that there is a recession in the economy, as well as inflation, which is increasing in some countries rapidly. However, the worst recession offers some best buying opportunities in the market.
Inflation condition in India
Inflation is not that bigger problem in India as it is very much low compared to some other countries in the world. The inflation rate is lower than 6% in India. So actually there are no bad inflation conditions in India. Still, It clearly seems that the prices of things are increasing as compared to the last few years. There are high prices of oil in India such as petrol, diesel, etc.
Ways to cope with inflation
- To deal with inflation people generally buy something whose value increases over time rather than keeping money somewhere. That could be gold, real estate, etc.
- Also we have other options like investing money in stocks, mutual funds, crypto, etc.
If I want to say what I am doing to deal with inflation then yes I preferred to invest my money in stocks and crypto.
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