I don't understand inflation. I understand that it's a measure of the price of things, but for me there should be two types of inflations
1. a dilution of money. Let say a central bank injects a lot of new money, then all prices will be higher, but salary will be higher too, and the overall effect is neutral
2. some prices increase due to change in supply or demand (e.g. gas or cereal), but salaries and everything else is unchanged.
In both cases, there's inflation according to the definition, but the second case is very different than the first, and it doesn't impact everybody equally (consumer vs saver).
I must misunderstand something because I never see this distinction in the medias.
In both cases, there's inflation according to the definition, but the second case is very different than the first, and it doesn't impact everybody equally (consumer vs saver).
I must misunderstand something because I never see this distinction in the medias.