[Music] when McDonald's launched the Big Mac in 1967 it cost just 45 but the same Big Mac now cost $3.99 why the answer is inflation to see how fast prices are rising everything from the price of a leg wax to the cost of a bottle of whiskey are closely monitored by statistical bureaus these changes in prices are entered into a calculator and out comes one single percentage number the rate of inflation and this number helps government set welfare payments and helps you decide how much to ask your boss for a pay rise in a stable
economy prices usually go up steadily over time by 1 or 2% a year but sometimes things get out of hand in 2008 prices in Zimbabwe doubled every 24 hours the government printed more and more money before long everyone was a trillionaire things got so bad that the country ran out of paper to print all the bank notes once an inflationary spiral like this begins it's almost impossible to get out of and governments must either devalue their currency or ditch it all together this is what happened in Germany in the 1920s so is inflation bad not
so fast a small amount of inflation is usually seen as a good thing it helps keep an economy growing and it also staves off the threat of deflation and a bit of inflation is good news if you're in debt just ask anyone who took out a mortgage on a low interest rate before a property boom but it's bad news for Savers just as inflation eats into debt it also eats into savings 00 stashed in your piggy bank will buy you less in 5 years time than it will today if your income isn't keeping up with
prices you're getting poorer for one of the most important Concepts in economics it's also one of the simplest inflation is just the average rate that prices are rising
