Inflation: what it means for your wallet
Understand why the same amount of money can buy less and how to spot those changes in your everyday expenses.
The number stays the same, but how far it goes can change
Inflation is a broad, sustained increase in the prices of goods and services. When it occurs, the same amount of money buys less: this is a loss of purchasing power.
A price increase in a single product is not enough to describe inflation across an economy. In Mexico, INEGI measures it using the National Consumer Price Index, which tracks a basket representing household consumption.
Look at the numbers in an example
Imagine a regular purchase costs $1,000. Some time later, the same products in the same quantities cost $1,050. You need $50 more, an increase of 5%, to buy exactly the same things. This is a hypothetical example, not a current inflation figure.
Your experience may differ from the national average. A household that spends more on transport will feel changes in those prices differently from one whose biggest expense is rent.
Keep an eye on your own expenses
Keep a few receipts and compare equivalent products: the same quantity, quality and time period. This helps you distinguish a price increase from a change in what you are buying.
Update your budget when your regular expenses change and compare alternatives before buying. When following the news, always check the period a figure covers: monthly and annual changes answer different questions and should not be treated as equivalent.