Yesterday, I went shopping at the market and was shocked by the prices. Rice is more expensive, meat is more expensive, and vegetables are almost all more expensive. This is what we call inflation—what exactly is it, and it’s a phenomenon people are dealing with right now.

So, what is inflation? In other words, it’s an economic condition where the prices of goods and services tend to increase continuously. Put simply, our money keeps losing value, so we have to spend more money to buy the same items. Think about it: before, 50 baht could buy many plates of rice, but now, 50 baht can buy only one plate. That is the power of inflation—what it is.

Why does inflation happen? There are many causes, but the main ones are that demand for goods increases but production cannot keep up; production costs rise because of higher global prices of crude oil, natural gas, steel, and copper; and there are shipping constraints, such as container shortages and semiconductor chip shortages. These problems increase costs, so companies have to raise the prices of their products, and we end up paying more.

So, what is inflation, and who is affected by it? Those who benefit are businesses and merchants, because they can raise their prices. But the people who are at a disadvantage are salaried employees, because their wages increase but not fast enough to keep up with the inflation rate.

When inflation becomes too high—called Hyper Inflation or deflation—the opposite situation occurs: prices of goods fall. Consumers do not want to buy, producers reduce production and cut the number of employees, and the economy becomes sluggish. This is something nobody wants to happen.

Let’s look at the current situation. According to IMF data, in January 2567, the world economy is expected to grow by 3.1% in 2567 and 3.2% in 2568, which is higher than the previous forecast because the United States and some emerging markets are still resilient. However, growth remains below the historical average due to tight monetary policy.

For Thailand, the consumer price index in January 2567 shows that overall inflation decreased to 1.11%, the lowest in 35 months. This is due to lower energy prices resulting from government measures, and lower prices of fresh food as the amount of produce entering the market increases.

If we look back, in 2517 Thai inflation shot up to 24.3% because of the Israeli war. In 2541, after the economic crisis, it rose to 7.89%. And most recently, in 2565 it rose to 7.10% because of the Russia-Ukraine war.

A clear example is PTT. In the first half of 2565, it had revenue of 1.68 trillion baht and net profit of 64,419 million baht, growing by 12.7% because oil prices surged. This shows that some companies can earn huge profits from inflation.

So what should we do if inflation gets too high? The cost of living rises, purchasing power decreases, business sales decline, costs increase, companies have to slow production, reduce investment, and cut the number of employees. Unemployment increases, and the economy slows down. This cycle is what economics calls Stagflation.

Right now, Thailand’s economy has not entered Stagflation, but we must always keep an eye on it, because the situation can change depending on geopolitical tensions and supply problems.

If inflation happens, investors should plan their investments. Do not keep money in banks because interest rates are low. Instead, invest in assets that offer returns higher than that—such as stocks, mutual funds, real estate, gold, Floating Rate Bond-type debt instruments, or Inflation Linked Bond.

Stocks that benefit from inflation include bank stocks because interest rates are trending upward; insurance stocks because they get higher returns from bond investments; and food stocks because these are necessities people have to eat.

Gold is also a good option, because its price moves in the same direction as inflation. The higher the inflation, the higher the price of gold. Investors can trade gold CFD to speculate on both rising and falling price movements.

In summary, what is inflation? It is a situation where prices of goods increase and the value of money decreases. At an appropriate level, it can be good for the economy, but if it gets too high, it becomes dangerous. Investors need to keep up with the news and plan their investments appropriately, so that our money benefits from this situation instead of suffering from it.