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Wednesday, 27 December 2023 02:12

What is inflation and how does it affect day-to-day life?

Written by Miguel Crespin
What is inflation and how does it affect day-to-day life?

In the modern economy, the prices of goods purchased daily or of services used tend to change with some frequency. Inflation refers to the increase in the prices of goods and services over a period, or in other words, the decrease in the value of money with respect to the amount of goods and services to be purchased with it.

The factors that generate it can be:

1) That the demand of people wanting to acquire something is greater than the availability of what they need.

2) The increase in the price of raw materials used for goods and services.

3) When there is more money to spend, but not enough goods to buy.

Then we can determine 3 types of inflation: Moderate inflation which is the one that does not exceed 10% per year, galloping inflation which is the one that exceeds 100% and Hyperinflation which is the one that exceeds 1,000% making money lose its value completely.

In El Salvador, according to studies, inflation is around 2.1%, so according to the President of the Banco Central de Reserva (BCR) Douglas Rodriguez, the Salvadoran economy is among the 4 Latin American economies with the lowest inflation.

This situation means that the prices of the basic food basket in november 2023 in urban areas will remain at US$255.59 and in rural areas at US$189.38.

 

 

Translated by: A.M

Published in Economy
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