Inflation: why prices rise and what to do about it

Inflation is when the same money buys less tomorrow than today. It sounds abstract, but everyone feels it at the checkout. Where does it come from? There are usually two groups of causes: either there is more money in the economy than goods, or the goods themselves grow costlier because of expenses — fuel, logistics, the harvest.

It is important to understand that inflation is unjust by nature. It hits hardest those with no cushion and fixed incomes — pensioners and less wealthy families. Expensive assets like real estate often rise in price along with inflation, while wages and savings in the bank lose value. So inflation quietly redistributes — from the poorer to those who own assets.

External shocks — pricier oil, logistics failures, poor harvests — do happen. But sustained inflation that lasts for years is almost always monetary in nature: the result of a country printing more money than it produces goods. So when leaders blame rising prices only on external factors, it is often a way to dodge responsibility for their own, often inept, management. Ludwig Erhard, the architect of the German economic miracle, was blunt about it:

“Inflation is an unforgivable sin” (German: Die Inflation — eine unverzeihliche Sünde).
— Ludwig Erhard

What helps? At the state level — sober monetary policy and predictability. At the personal level — not keeping everything in depreciating money, investing in skills (which grow costlier along with prices), and not giving in to panic, which itself drives prices up. There is no universal recipe; there is common sense.

My opinion: inflation is a tax no one voted to introduce. So a government’s honesty is measured not by promises to freeze prices but by the ability to explain the causes and not to solve the problem in ways that become a new problem tomorrow.