inflation there is a sustained increase in the overall level of prices. Simply put: you buy less products today for the same 100 gel than you did a year ago. Money is “cheaper” — its purchasing power is reduced.
how is it measured?
they measure inflationconsumer Price Index (CPI) — This is a change in the value of the “shopping cart” of products and services purchased by a typical family. This data is published monthly in Georgiageostat, and is responsible for price stabilitynational Bank of Georgiawhich has a medium-term inflation target (3%).
why does inflation occur?
- increase in demand — When the buyer has more money than the goods on the market.
- increase in costs — Increase in fuel, raw materials, salaries or imports.
- currency rate — When the gel is depreciated, the imported products become expensive.
- expectations — If everyone expects a rise, prices are really going up faster.
what does it mean for your money?
if you receive 8% per year on your deposit and your inflation is 5%, yourReal earnings are around 3%. If money is just at home, inflation is eating up its value every year.
real profitability ≈ Nominal profitability – Inflation
how to protect your savings?
- earned assets — Operating a business or share of a business whose prices increase with inflation.
- REAL PROPERTY — Historically maintains good value, especially in the case of rental income.
- diversification — Distribution in different assets and currencies reduces the risk.
- financial pad — 3–6 months expenses should always be available.
in terms of inflation, the money that “works” is stronger than the money that waits.
the article is informative and does not constitute financial, tax or legal advice. Consult with a specialist before making an important decision.
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