Market Trends

FAQ: What is Inflation?

January 16, 2025 | Tom O’Neill
Reading Time: 2 minutes

Even if you’re not sure about the exact definition of inflation, you have probably felt its effects. Here, we’ll share:

  • What is inflation?

  • How does inflation affect me and my family?

  • What will happen with inflation in 2025?

Of course, there is no way to predict the future. The good news is that our experts are well-versed in inflation, so you’ll learn what you need to know here. 

What is inflation?

Inflation is the gradual increase in the cost of goods and services, like groceries, gas, and rent, over time. Practically, it means that a dollar today is not worth as much as a dollar yesterday.¹

Inflation isn’t always bad.² A small amount of inflation can be healthy for the economy because it shows that people are spending money. However, too much inflation – and when prices rise too quickly – can become problematic.

How does inflation affect me?

Inflation touches nearly every part of daily life.³

  • Groceries and Essentials: Higher prices overall mean your grocery bill increases, even if you’re buying the same things you usually purchase. 

  • Rent and Housing: If you rent, your landlord might raise the rent to keep up with their own rising maintenance costs due to inflation. Similarly, if you’re paying a mortgage, the cost of materials to fix or maintain your home might also rise.

  • Savings: Unfortunately, the money you’ve saved loses value, because if you saved $1,000, it won’t buy as much as it could last year. 

  • Wages: Sometimes your paycheck doesn’t grow as quickly as inflation, making it harder to afford basic needs.

What will happen with inflation in 2025?

Although more data will be available in February, economists predict that inflation may continue to slow down throughout 2025.⁴ Taking a closer look at global inflation, balancing growth and risk will be important to determine if this will hold true. Recent U.S. elections could change global trade trends, and small businesses, which employ nearly half of workers in the U.S., play a big role in economic stability. Problems in this sector could lead to job losses and financial struggles – and this all influences inflation.  

Keep Goals Within Sight

To stay on top of inflation trends:

Sources:

  1. Equifax, How to Protect Yourself Against Inflation

  2. Investopedia, When is Inflation Good for the Economy?

  3. CBS News Price Tracker

  4. Equifax, What Are the Real-World Impacts of Global Economic Trends?

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Tom O’Neill

Tom O’Neill

Senior Advisor

Tom O'Neill brings over 20 years of experience leading analytic consulting engagements within Financial Services and other industries. As a Senior Advisor at Equifax, O’Neill provides analytic thought leadership to client senior management, public forums, and various industry and advisory councils. While at Experian u[...]