HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
Vantage information and reviews
Vantage
85%
XM information and reviews
XM
82%

Why Is Inflation So High?


You may have noticed that the prices of your favorite products have recently increased quite a lot. The reason is the incredibly high rates of inflation impacting economies of countries all around the world. In this article, we will learn what inflation is, why it happens, what consequences it can have for average consumers, and what caused the inflation in 2022.

What is Inflation?

Inflation is an economic term used to describe a rise in the price of goods and services that causes the loss of purchasing power over time. Inflation is an important indicator as it shows how much the economy of a country has changed within a given period of time and whether or not the change in question affected the financial well-being of the country’s population.

Typically, inflation is expressed as a percentage demonstrating the rate of price increase within one year. Generally, inflation is calculated by a government agency that gathers the data about the current price of a certain basket of goods and services.

This basket normally includes food, gas, clothing, medicine, energy, mortgage payments etc., but its contents may vary depending on the volatility of the price of a certain product. The agency collects the information about the prices every month and then divides the average cost of the basket of goods by the cost of the same basket from the previous month.

This year’s statistics show that in October 2022 100$ in the USA could buy the same basket of products as $92.81 in October 2021, indicating that the inflation has increased dramatically since last year.

Major Causes of Inflation

There are several major causes that can affect the rate of inflation.

Inflation: Benefits and Drawbacks

Inflation is not always bad. Low inflation rate (~2%) is actually a very good thing as it encourages people to buy more. There are several benefits to inflation:

However, when inflation is high, just like now, it creates a lot of problems:

Why is Inflation So High Right Now?

The data from all over the world shows that this year’s inflation has reached a new record high for the first time since the 1980s. As you can see from the table, this time it spans across multiple countries all over the world. There are multiple reasons for this.

Conclusion

Even though inflation can have a positive effect on the economy, the current inflation is a very concerning phenomenon because it is caused by multiple factors outside the governments’ control. To stabilize the economy, the central banks can try to raise key rates. This may theoretically cause people and companies to borrow and spend less money, slowly bringing the prices of goods down. But without a solution to the natural resources crisis, the global economy may go into another recession.

FAQ

#source


RELATED

Online Trading vs. Offline Trading

Nowadays, any person who wants to engage in trading is not faced with the question of how exactly to do it. Access to relatively free and fast Internet is available in almost every country in the world...

Forex Currency Pairs Explained

The forex market may seem quite complicated to some newbies. Plenty of instruments, calculators, different programs, and strategies - all this can make an unprepared trader's head spin...

Things Football Can Teach Traders

As the 2022 FIFA World Cup countdown is fast approaching, football fans from around the globe are picking up the pace to gear up for the world’s most popular game...

Top 10 Greatest Traders of All Time

Let’s chill from charts and read about the world's greatest traders who affected markets and left a mark on trading history. Not everything is simple about traders’ success but also about the hundred of past losses...

How to Start Trading from Home

The unprecedented COVID-19 pandemic practically confined people worldwide in their homes. But technology helped many people navigate the "new norm", or at least cope with it...

Trading Psychology

Trading psychology is a key contributing factor to determining trading outcomes, as it can positively or negatively influence decision making...

Seven Crucial Forex Trading Rules to Live By

As a forex trader, your main goal is to take advantage of market opportunities by buying and selling major currency pairs. But forex trading is no walk in the park. While it’s one of the most popular ways to invest...

Future of banking in cryptocurrency world

What is the future of banking, central banking and financial intermediation in a world in which cryptocurrency is dominant? Let�s speculate a bit...

What Is Money Flow Index (MFI) In Forex Market Trading

One of the most important functions of financial markets, including the foreign exchange market, is the redistribution of money. Through the purchase/sale of stocks....

Who has lost the most money ever on the stock market?

Who has lost the most money on the stock market? Continue reading today's article to learn more! In the world of markets and trading just as profits take place on a daily basis, losses are also recorded on a daily basis...

Unlocking the Secrets of Trading Success: Is There a Magical Formula?

Have you ever contemplated whether trading is your true calling? Perhaps the more pertinent question is: are you suited for trading? Is there indeed a magical formula...

Correlation, Portfolio Returns, and Strategic Hedging

The dance of correlations within a portfolio is a crucial subject for both experienced and budding investors. At the heart of investment strategies, understanding correlation not only protects the portfolio...

The Gold Standard: A Comprehensive Look into the Advantages of Gold Trading

From ancient empires to contemporary financial systems, gold has long been recognized as a potent symbol of affluence, security, and durability. Its timeless allure has established it as an instrumental asset for traders and investors...

Five things about Forex every trader needs to know

OctaFX have prepared an essential guide for traders beginning their Forex journey, followed by a workshop by the professional trader and coach Cikgu Danie...

Innovations in Forex Trading Technology

Read this article to learn about advancements in trading technology, such as AI-driven trading bots and advanced charting tools.

Is a forex hedging strategy effective?

Forex hedging is a risk management strategy that offsets potential losses by taking opposite positions. It involves placing trades that serve as a safeguard against adverse price movements...

Mastering Risk Management: Techniques for CFD Trading

Read this article to discover practical risk management techniques for successful CFD trading. Learn about setting stop-loss orders, position sizing, risk-reward ratios, and more...

Top 5 Black Friday scams and how to avoid them: make your holidays stress-free

OctaFX has prepared a list of security tips that will come in handy during this year’s Black Friday and Cyber Monday...

A Comprehensive Guide to Strategies, Tools, and Key Indicators

For active traders and investors, mastering the art of trading volatility is a crucial skill. Volatility, in financial terms, refers to the extent to which asset prices fluctuate over time. High volatility markets experience...

Unlocking the Potential of Real World Assets (RWAs) in Crypto

The world of finance is witnessing a transformative revolution with the advent of real world asset tokenization, or RWAs, in the cryptocurrency space. Imagine having the opportunity to own a fraction...

FP Markets information and reviews
FP Markets
81%
RoboForex information and reviews
RoboForex
77%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.