What Is Inflation And How To Protect Yourself From This Economic Mugger?

“Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.”

— Former U.S President Ronald Reagan

What is inflation?

Remember: When inflation goes up, purchasing power of money goes down.

Image Source: http://www.usinflationcalculator.com/inflation/current-inflation-rates/

Geek Stuff: Calculating Inflation Rates

Annual rates of inflation are calculated using 12-month selections of the Consumer Price Index (CPI).

For example, to calculate the inflation rate for May 2018, subtract its CPI of 251.588 from last year’s May 2017 CPI of 244.733. The result is 6.855. Divide this number by the May 2017 CPI and then multiply by 100 and add a % sign.

The result is May’s inflation rate of 2.8%.

Causes of Inflation

How Does Inflation Impact Your Life?

How to Protect Yourself?

Remember: As inflation increases, the value of the TIPS bond increases.

Summary

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