What does inflation mean?

There are 3 levels of inflation.

low inflation level
- Impact of low inflation: Mild inflation usually indicates a growing economy. Product prices increased moderately. and the business may have increased profits This could lead to wage increases and job creation.

• Monetary strategies when inflation is low: during periods when inflation is not high. Traditional methods of saving and investing, such as savings accounts or bonds. It also gives good returns.

Moderate level of inflation
- Effects of Moderate Inflation: When inflation is moderate. Prices of goods and services will obviously increase. And the cost of living may increase faster than wages. This situation could squeeze personal finances and reduce consumer spending.

• Monetary strategies in the face of moderate inflation: In the face of moderate inflation. You may need to employ a more aggressive investment strategy. Assets whose returns keep pace with or exceed inflation, such as stocks or real estate. It might be a better option than just leaving your money idle. in savings account Because of the risk of leaving money alone Starting to be comparable to other investments

high inflation level
- Effects of hyperinflation: Hyperinflation often damages the economy. Prices of goods and services can rise so rapidly that local currencies depreciate. Leads to economic instability and may cause division in society.

• Monetary strategies when inflation is high: In hyperinflation Look for strong assets such as gold and real estate. Other currencies or investing in large and stable foreign markets

Thailand's inflation rate in 2023
Year 2023 | Q1 | Mar. | Feb. | Jan.
Inflation rate (%) | 3.9 | 2.8 | 3.8 | 5
Exchange rate | 33.92 | 34.5 | 34.01 | 33.23
Export value (million US dollars) | 69,806 | 27,079 | 22,375 | 20,352
Export value expansion rate (%) | -4.6 | -5.8 | -4.1 | -3.4

What causes inflation?- Demand-Pull Inflation: occurs when the demand for goods and services exceeds the supply. (Demand is greater than the quantity offered by sellers), which may be caused by factors that increase consumer purchasing power, such as falling interest rates. Increased consumer confidence or fiscal policy, such as tax cuts
- Cost-Push Inflation: Occurs when overall supply decreases. (Decrease in output entering the market.) Motivating factors such as higher wages increase costs for firms and are passed on to consumers at higher prices. or the cost of raw materials has increased

Advantages of inflation

Appropriate inflation is a sign of a healthy economy.

Deflation risk

How does inflation affect it?
- Purchasing power: When the inflation rate increases Consumer purchasing power will decrease. This means that the cost of living is higher. Because they have to pay more for the same goods and services.
- Uncertainty: High inflation can lead to uncertainty in the economy. This causes consumers to spend less and save more. This may reduce overall demand. Because various manufacturers Want to reduce risk
- Wealth transfer: Unpredictable inflation can put creditors at a disadvantage to debtors. For example, money lent by creditors today will be worth less in the future. This causes the debtor to pay less on the debt compared to the actual value. This situation may cause debtors to lose motivation to save. and may change spending behavior Able to recover excessive debt
- International trade: High inflation can make exports more expensive. It affects the trade balance and worsens the current account.

Inflation and savings and investment

Inflation and savings

Inflation and investment

Inflation and the real estate market

Inflation affects housing prices.

Renting a home during inflation

Inflation and income and wages

Accounting income and actual income

Wage-Price Spiral

How to measure inflation
- Consumer Price Index (CPI): measures the average change in the price of goods and services spent by consumers over a period of time. Compared to the base year- Wholesale Price Index (WPI): Measures wholesale product prices. Before deducting the retail price and sales tax of any period. Compared to the base year

How to cope and deal with inflation

1) Deal with inflation

2) Track inflation

3) Spend wisely

4) Review your savings strategy.

5) Diversify investments

6) Invest in stocks

7) Invest in real estate

8) Increase income generating channels