Markets · 3 min read
Inflation Explained
Inflation is the rise in prices over time — your money buys less next year than it does today.
Why it matters
Any investment returning less than inflation is losing real value.
Advantages
- Signals a growing economy (mildly)
- Reduces real value of fixed debt
Risks
- Erodes savings
- Hurts fixed-income investors
- Central banks respond with rate hikes
Real-world example
At 6% inflation, ₹100 today buys what ₹55 buys in 10 years — real returns matter.
Key takeaways
- Beat inflation, don't just match it
- Real assets (stocks, real estate, gold) can help
- Fixed deposits alone may underperform inflation after tax
Quick quiz
1. Real return equals: