For most people, inflation may not be a good thing because they have to pay more for their food and their lives. Therefore, we must pay attention to the economic world and prepare for inflation, are there any signs of this. Inflation is, by definition, a continuous increase in the sustained increase in the overall price level of goods and services. People use the annual percentage when they refer to it.
Because of the close link between inflation and money, it affects so much of our lives. As we mentioned, when inflation is high, we actually pay more for less. This means that the value of our money decreases in line with inflation. And therefore our purchasing power is lower. It is therefore important to look for signs of inflation.
The most obvious sign of inflation is the price of goods. The sudden price increase for 1 or 2 months may not be related to inflation but to seasonal factors. What we are looking for is an increasing trend in the price of goods. We can refer to the moving averages of the CRB over the past nine months. If such a commodity price index shows an upward trend, inflation may occur.
It is not enough to conclude whether there is inflation, considering only the price of goods. We can also look at the trend of the consumer price index, the consumer price index. CPI is a powerful inflation index used by government agencies in many countries. The CPI's definition of the Bureau of Labor Statistics in the US is "a measure of the average time change in prices paid by urban consumers for a basket of consumer goods and services." If the consumer price index shows an upward trend, inflation may result.
In addition to the cost of goods and CPI, it is always helpful to look at the price of gold. Because gold is less related to other commodities and is a safe haven for investors during inflation and the financial crisis. Therefore, the price of gold rises during inflation. This is not accidental, but it is actually evidenced by statistics from the Bureau of Commodity Research.
Interest rates have always been a hot topic for economists and a good sign of inflation. When inflation occurs, long-term interest rates are high and rising. This is because the money lender requires a profit from his money. In order to make such a profit, their interest rate must be higher than the inflation rate. Therefore, the interest rate increases when there is inflation.