Imagine you had €100 in your wallet in 2020.

The €100 note still says €100 today, but can it buy the same amount of groceries, fuel, and services?

Probably not. That is inflation.

Inflation is the rate at which prices of goods and services increase over time.

If inflation is 3%, something that costs €100 today may cost about €103 next year.

Inflation doesn't mean your money disappears. It means your money buys less than before.

The most common causes are:

✅ More demand than supply (people buying more than businesses can produce)

✅ Rising energy costs

✅ Higher wages

✅ Supply chain disruptions

✅ Increased money and credit flowing through the economy

Inflation is usually caused by a combination of factors rather than a single event.

A simple way to think about it:

Inflation is the speed at which your purchasing power shrinks.

Your bank balance may stay the same, but if prices rise faster than your income, you are becoming poorer in real terms.

People often say: "Money is losing value."

This is exactly what inflation means.

If inflation is 5% and your savings account earns 1%, your money is losing purchasing power every year.

That is why many people invest rather than keeping all their money in cash.

Governments measure inflation using a Consumer Price Index (CPI).

The CPI tracks a basket of everyday goods and services such as:

✅ Food, Energy, Transport, Housing, Clothing …

When the CPI rises over time, inflation exists.

For most people:

✅ Maintain an emergency fund

✅ Avoid unnecessary debt

✅ Increase skills and income

✅ Invest for long-term growth

✅ Review spending regularly

Panic is usually the wrong response.

No. Every country has its own inflation rate.

However, global events such as oil price increases or supply shortages can cause inflation in many countries at the same time.

Inflation (CPI) includes everything.

Core inflation excludes items that are very volatile, mainly energy and certain food products.

Economists often watch core inflation because it shows underlying price trends.

For ordinary people:

✅ CPI tells you what you're experiencing.

✅ Core inflation helps explain longer-term trends.

Both matter.

According to the Central Statistics Office, consumer prices in Ireland were 3.7% higher in August 2026 than a year earlier. Core inflation (excluding energy and unprocessed food) was 2.9%.

Inflation isn’t prices going up. Inflation is your money buying less.

Understanding that single idea is the first step toward understanding saving, investing, pensions, and wealth building.