What are the effects of inflation on the economy?

What are the effects of inflation on the economy?

Inflation can erode purchasing power, increase costs of living, and impact savings and investments.

How does inflation affect interest rates?

Typically, central banks raise interest rates to combat high inflation, which can slow down economic growth.

What sectors are most affected by inflation?

Sectors like housing, food, and energy often see the most significant impacts due to rising costs.

Can inflation lead to a recession?

Yes, if inflation is too high, it can lead to reduced consumer spending and investment, potentially triggering a recession.

What can individuals do to protect themselves from inflation?

Individuals can invest in assets that typically outpace inflation, like stocks or real estate, and consider inflation-protected securities.