What is inflation? You who always read the news or articles must always find the word inflation right?
But many still do not understand when it comes to inflation.
What is real inflation? Inflation is the increase in the price of goods or services in the economy over time.
Do you remember, once upon a time the price of a cup of iced tea was around RM0.70 and RM0.80? Now the price of a cup of iced tea is RM2. That price is normal for us at the moment.
In other words, inflation also shows a decline in consumer purchasing power.
For example, we have RM2, the price of a pen is RM1. So we can buy two pens.
When the price increase occurs, the price of the pen becomes RM2 and we can only afford one pen. This means that our purchasing power as consumers has decreased.
Among the factors that cause inflation is when the demand for a good or service exceeds the capacity that can be produced by a country's economy.
As demand increases, so will the price of goods. This situation is known as the ‘demand-pull effect’.
In addition, rising manufacturing costs also contribute to inflation. For example, the increase in factory workers has forced employers to incur higher wage costs or rising raw material costs.
These factors will cause the cost of manufacturing to be high and thus result in the price of goods also increase. This situation is also called 'cost-push inflation'.
In the economic calendar as you see on the kakiforex.com website or forexfactory, the data that is an indicator of inflation is the Consumer Price Index (CPI) or consumer price index (CPI).
CPI data is also a guide for central banks to measure current economic health. This data is also important for the central bank's reference in setting monetary policy because the central bank has set inflation levels in maintaining the country's economic stability.
