Financial literacy guide

Inflation and purchasing power

Inflation describes a general rise in prices over time, which means a fixed amount of money may buy less in the future.

InflationPurchasing power

Editorial review: August 11, 2026 · Lauren M. Whitfield

Nominal vs real value

An account balance can rise while purchasing power grows more slowly if prices also rise.

Short-term cash has a purpose

Emergency savings may prioritize accessibility and stability rather than maximizing long-run return.

Long goals need context

A future cost estimate may need updating as prices change.

Rates differ by category

Housing, food, transport and education prices do not necessarily move at the same pace as a headline inflation measure.

Educational information only. Use current product terms and the rules that apply in your country. For decisions with significant financial consequences, consider an appropriately qualified professional.