Recently, there has been a lot of talk about inflation. Think about it: inflation is a situation where the prices of goods and services continuously rise, which means that the money in our pockets gradually loses its purchasing power. For example, in the past, 50 baht could buy many bowls of rice, but now it can only buy one bowl. That is inflation making things more expensive.

From an ordinary person's perspective, inflation mainly results from three main causes. The first is increased demand for purchasing, but insufficient supply. The second is higher production costs due to global oil and commodity prices. The third is the government printing more money into the system. Currently, the world faces a situation where all three factors are happening simultaneously.

What’s interesting is that inflation does not harm everyone. Some people actually benefit, such as merchants who can raise their prices according to market conditions. Shareholders and banks also profit from investments. But those at a disadvantage are salaried employees because their wages increase but not enough to keep up with inflation.

Looking at Thailand’s economic history, the highest inflation was in 1974 at 24.3 percent due to the Middle East war. High figures also occurred in 1998 at 7.89 percent after the economic crisis. Most recently, in May 2022, it surpassed 7.10 percent due to the Russia-Ukraine war.

This is important: inflation is a trend that greatly influences investment decisions. When inflation rates are high, deposit interest rates are low. Keeping money in the bank doesn’t seem very worthwhile. Therefore, people turn to invest in other assets such as stocks, gold, or real estate.

For example, PTT, during a good economy because of high oil prices, posted a net profit of 64,419 million baht in the first half of that year, growing by 12.7 percent. Banking and insurance stocks also benefit because interest rates rise.

But if inflation spikes too high (called hyperinflation), it becomes a problem. Prices become so high that people buy less, sales decline, businesses cut production, lay off employees, unemployment rises, and the economy stalls. This is something no one wants to happen.

Inflation differs from deflation, which is the opposite. Prices continuously fall, demand decreases, and the money supply in the system is insufficient, causing the economy to stumble. Both situations are dangerous for economic growth.

To cope with inflation, it’s advisable to plan investments that yield returns higher than deposit interest rates, avoid unnecessary debt, invest in stable assets like gold, and always keep an eye on economic news. For those with enough money, buying real estate is also good because rental income increases with inflation. Bank and insurance stocks are also good options at this time.

Ultimately, moderate inflation is good for the economy because it stimulates growth. But if it becomes excessive, it turns into a major problem. Investors should monitor the situation carefully to avoid missing opportunities and to mitigate risks.