{"id":5940,"date":"2021-12-09T14:04:25","date_gmt":"2021-12-09T14:04:25","guid":{"rendered":"https:\/\/intelekbusinessvaluations.com\/en-us\/?p=5940"},"modified":"2023-04-28T20:36:59","modified_gmt":"2023-04-28T20:36:59","slug":"how-does-inflation-impact-your-business","status":"publish","type":"post","link":"https:\/\/intelekbusinessvaluations.com\/en-us\/business-valuations\/how-does-inflation-impact-your-business\/","title":{"rendered":"HOW DOES INFLATION IMPACT YOUR BUSINESS?"},"content":{"rendered":"

What Is Inflation?<\/strong><\/h2>\n

\u00a0<\/strong>Inflation is a term used to describe the change in price of a bundle of products and services over time.<\/p>\n

Normally, it\u2019s defined as a rate. For example, if the total price of a bundle of goods and services was $100 a year ago and now it\u2019s $105, then the inflation in the last twelve months of those items is 5%.<\/p>\n

How Is Inflation Determined?<\/strong><\/h2>\n

\u00a0<\/strong>Public institutions set a specific bundle of products and services, and find the weighted average of price change over a timeframe to determine the nation\u2019s inflation.<\/p>\n

These means that while some prices of the items in the bundle could have increased 20%, the overall inflation might yield lower, as many other items had a lower inflation increase. For example, the price of motor fuel increased 49.6% from October 2020 to October 2021, but the overall inflation in this same period was 6.2%\u2014which is still a historical 30-year high.<\/p>\n

\"HOW<\/h2>\n

Why Is Inflation a Concern?<\/strong><\/h2>\n

\u00a0<\/strong>Inflation concerns everybody, because it makes money saved less valuable due to the price of the products and services increasing while your money saved in the bank remains the same.<\/p>\n

This means that your \u201cpurchasing power\u201d decreases, and therefore the value of your money is less. Your $100 dollars in the bank now buys you less goods and services than previously.<\/p>\n

What Causes Inflation to Increase?<\/strong><\/h2>\n

\u00a0<\/strong>In an economy, there are different sets of circumstances that can drive inflation up or down. Some of these are:<\/p>\n