In layman term: “How fast your money become less valuable?”
The threat of inflation and how it affects personal finances significantly by reducing the purchasing power. You buy less for the same Ringgit you have!
- How do you feel about this?
There is no way of knowing what will happen to interest rates and inflation – in future years.
In a rising inflationary environment, the purchasing power of money will be eroded as every Ringgit will buy fewer goods and services over time.
RM1 will buy you:
1970s = 4 cups
1980s = 2 cups
1990s = 1 cup
Today = ½ cup
"You buy less for the same Ringgit you have!"
40 years ago RM1 can buy us 4 cups of coffee but today it can only buy us half a cup of coffee.
The value of money has shrunk by 87.5% (1 – 1/8 = 7/8 = 0.875 = 87.5%) since 1970s.