Inflation

What is Inflation?

Inflation is the increasing price for goods and services over time. The price we pay for goods and services may rise quickly or slowly, depending on the rate of inflation.

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Transcript

What is inflation?

Imagine a block of cheese. Last year you may have paid $8 for it, but now it’s $15 for the exact same block!

So, in other words, inflation is when prices keep rising over time and our money buys less.

When does inflation occur?

When more and more people want certain goods or services, but there’s a limited supply.

For example, imagine 10 people want to buy the same house—but there’s only one… the price will go up and up. Or, if bad weather ruins a crop of fruit or veggies, it means there’s less to choose from making it more expensive.

Other times, inflation happens when there’s extra money in the system from the government, like during Covid-19, or when there’s a decrease to interest rates, which makes it easier to spend money.

Inflation affects us all in different ways. Sometimes it makes people spend money instead of saving it—boosting our economy. But high inflation can also make things cost more and people start struggling to afford the basics.

Is there something we can do?

It’s not always easy, but things like sticking to a budget, finding ways to earn extra income or by savvy investing (KiwiSaver)—can help make inflation more manageable.

Inflation learning activity 183 kb, PDF

Find out how inflation impacts you and your whanau. Understand what it means for the cost of things we buy, the advantages and disadvantages, and learn about ways you can manage it.

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