The general rise in prices, which quietly shrinks the value of cash. At 3% a year, money loses roughly half its purchasing power in 23 years. Your balance does not change; what it buys does.

Markets & macro

Inflation

The general rise in prices, which quietly shrinks the value of cash.

Full guide, with a simulator

Inflation: the tax nobody votes for

At 3% a year, money loses roughly half its purchasing power in 23 years. Your balance does not change; what it buys does.

This is why 'safe' cash is not safe. It carries the one risk that is effectively guaranteed to materialise, and it does so silently, without ever appearing as a loss on any statement.

Figure

The basket is an average, and you are not average

Housing

32%

Transport

16%

Food

13%

Recreation

11%

Energy

Everything else

20%

If you rent in a city and drive to work, your personal inflation rate in a year of surging rents and fuel can be double the headline. The number is not lying. It simply is not about you.

Why it matters

It sets the hurdle every investment must clear simply to stand still.

The mistake everyone makes

Thinking of cash as risk free. It is nominal-value-free, which is a very different thing.

Related terms

Real return

Your return after inflation. The only one that buys anything.

Compound interest

Returns earning returns. The engine of every long-term outcome.

Yield curve

Interest rates plotted against how long you lend for.

See Inflation on a real company

SteadyShares pulls this straight from the filings for 1,100+ companies, alongside moat scores, DCF fair value and peer comparison. Free to look around.

Open SteadyShares