Inflation
The general rise in prices that reduces money’s purchasing power.
Definition
The general rise in prices that reduces money’s purchasing power.
Why this concept matters
It helps estimate what your capital will actually buy in the future.
How it works
Elephlow separates the future amount displayed from what that amount may represent in today's purchasing power. The longer the period, the larger the gap may become.
Calculation guide : Real value ≈ future value ÷ (1 + inflation) ^ time
What to watch
A positive nominal return can still be negative after inflation.
Simple example
With 2% inflation, £100 of goods costs about £122 ten years later.
Example currency : United Kingdom (GBP). The reference country controls the example currency.
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