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Who wins and who loses from inflation

Who wins and who loses from inflation

Inflation is an increase in the cost of goods and services.

Definitely inflation negatively affects the purchasing power.

And there are the ones to benefit from this process?

Who loses from inflation

Inflation leads to depreciation of money peopleand a decrease in their purchasing power. As a result, money lose part of their real value, and in the future for them will buy fewer goods and services than ever before. Thus, with inflation at 10% in 10 years, all the accumulated funds completely worthless and turn into ordinary paper, do not have any value.

Inflation - the average rate, it does not mean a rise in prices for all goods and services. The cost of certain goods and services may rise, fall or remain unchanged.

For most of the population, inflation -negative process. Among those who lose from inflation can be distinguished citizens with fixed-income investors in the banks, lenders and entrepreneurs.
So, the first selected categories have to earn more to save the former standard of living. They need to increase their income by at least the rate of inflation.

For example, a person with a salary of 30 thousand river with an annual inflation rate of 10% is required in the next year to earn 33 tys.r. to maintain the current level of consumption.

In a particularly difficult situation are those who do notIt has the opportunity to increase their own income, such as pensioners. It is worth noting that each year the pension is indexed to the official inflation rate in Russia. The cost of the most important for pensioners of goods and services (eg, housing supply products and services) can grow faster pace, and on other goods - to a lesser extent. Thus, the increase in the pension will not cover the actual drop in purchasing power.
Hit inflation and depositors having deposits with a fixed rate. In Russia today, most of the interest rates on deposits do not cover the real inflation.
The unfavorable situation are those who lend money, ie, creditors. But only if the interest on the loan does not cover inflation.
For entrepreneurs inflation creates complexity for scheduling business processes and pricing.

Who benefits from inflation

But there are those who find themselves in the black against inflation. This, for example, borrowers who pay on the loan with cheaper money. Although most banks initially include inflation risks in the interest rate.
Also can benefit business owners,involved in the service sector. For example, legal agency, repair and finishing companies, hair salons and so on. If the employer raises the prices of services, while maintaining a constant salary, he receives an additional income. The trade and the manufacturing sector, where profit depends on raw material cost (purchased goods), the effect of inflation may be less pronounced.
The positive effect of inflation experienced and those who work in enterprises that increase wages faster pace of inflation in the period.

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