Economics Inflation Questions
The impact of inflation on savings is that it erodes the purchasing power of money over time. As the general price level rises, the value of money decreases, meaning that the same amount of money can buy fewer goods and services. This reduces the real value of savings, as the money saved will not be able to buy as much in the future as it could in the present. Inflation can therefore diminish the ability of individuals to maintain and grow their savings over time.