There is an interesting topic related to economics that affects everyone's wallet: inflation. It is a phenomenon where the prices of goods and services continuously rise, making our money buy less.

Imagine this situation: many years ago, 50 baht could buy several plates of rice, but today it can only buy one plate. That is the result of inflation — the decrease in the purchasing power of our money. In the next two or three decades, rice prices may double or more.

Why is inflation a significant problem? Because it impacts investment decisions, financial planning, and even daily living. When entrepreneurs can raise their prices, but employees with fixed salaries are at a disadvantage because their wages increase more slowly than inflation.

Inflation results from several causes. First, a sudden increase in demand for goods, but producers cannot keep up. For example, after the lockdowns, people wanted to buy more products, causing prices to surge. Second, rising production costs, whether it’s crude oil, natural gas, or chip shortages in electronics manufacturing. Third, supply chain issues that increase transportation and handling costs.

The way to measure inflation is by looking at the Consumer Price Index (CPI) every month. The Ministry of Commerce collects data on 430 items, then compares it to the previous year. The increase in this index is the inflation rate that the Bank of Thailand uses as a target.

Who benefits from inflation? Entrepreneurs, traders, and shareholders gain an advantage because they can raise prices according to demand. Those who are disadvantaged are salaried employees because their wages do not keep pace with inflation.

The impact on our daily lives includes essential goods prices rising, such as meat, eggs, vegetables, and oil. The rice price table shows that in 2021, red pork cost 137.5 baht/kg, but in 2022 it surged to 205 baht/kg. In 2023, it decreased to 125 baht/kg, and in 2024, it adjusted to 133.31 baht/kg. Such volatility makes the cost of living uncertain.

So, what is deflation? It is the opposite of inflation. Deflation is a situation where prices of goods decrease continuously. It may result from decreased demand or insufficient money supply. Both inflation and deflation are signals of an unbalanced economy.

When inflation occurs, what should we do? One way is to plan investments wisely, such as depositing money in high-interest accounts or investing in assets with stable value, like gold. Investing in real estate is also a good option because rental income tends to increase with inflation.

Which sectors benefit? Banking stocks benefit because interest rates rise. Insurance stocks also perform well. Food sector stocks are a good choice because they are essential goods that people will buy regardless of price increases.

Inflation is a phenomenon that is hard to avoid. But if we understand it, we can adapt and create opportunities. Always stay updated on economic news to avoid missing important signals, because preparing in advance helps us stay safer.