A Definitive Guide to Understand Inflation.
                     A DEFINITIVE 
GUIDE TO 
UNDERSTAND 
INFLATION
2/1/20XX 1
Inflation
•Infl ation is the rate at which the prices for 
goods and services increase. Infl ation often 
aff ects the buying capacity of consumers. 
•Most Central  banks try to l imit  infl ation in 
order to keep their respective economies 
functioning effi ciently. 
S o u rc e :  c l e a r t a x . i n
CAUSES OF INFLATION
Money Supply
•Excess currency supply in an economy is 
one of the primary cause of infl ation. 
•This happens when the money circulation in 
a nation grows above the economic growth, 
therefore reducing the value of the currency.
S o u rc e :  c l e a r t a x . i n
National Debt
•There are several  factors that infl uence 
national debt, which include the nations 
borrowing and spending. 
•Taxes  can  be  ra i sed  i n te rna l l y.
•Add i t i ona l  money  can  be  p r in ted  to  pay  off  the  deb t .
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Demand-
Pull Effect
•The demand-pull eff ect 
states that in a growing 
economy as wages 
increase within an 
economy, people will have 
more money to spend on 
goods and services.
Source:  c leartax. in
Effects of 
Inflation
•When there is infl ation in the country, the 
purchasing power of the people decreases as 
the prices of commodit ies and services are 
high. 
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Effects of 
Inflation Cont.
•The value of currency unit decreases which 
impacts the cost of l iv ing in the country.  
•When the rate of infl ation is high, the cost 
of l iv ing also increases, which leads to a 
deceleration in economic growth.
S o u rc e :  c l e a r t a x . i n
STEPS TO 
OFFSET 
INFLATION
Invest in long-
term 
investments
•When it  comes to long-term investments,  
spending money now for investments can 
al low you to benefi t from infl ation in the 
future.
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Make balanced 
investments
•Though investing in bonds alone feel  safer,  
invest in mult iple portfol ios. Do not put al l  
your eggs in one basket to outpace infl ation.
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Save More
•Retirement requires more money than one 
might imagine. The two ways to meet 
retirement goals are to save more or invest 
aggressively.
S o u rc e :  c l e a r t a x . i n