2. Inflation: What Is It — And Why You Should Care
Inflation is the sustained increase in the general price level. When you see gas, groceries, or rent costs going up, that’s inflation. Here’s why it matters:
- Your cash loses purchasing power—what you buy today will not cost the same tomorrow.
- It pushes out your financial goals—whether that is retirement, a down payment, or college tuition.
- Retirees and fixed-income earners are hit hardest because they do not earn more to offset inflation.
In May 2025, the Consumer Price Index (CPI) was 2.4% year-over-year, with core inflation at 2.8% (finder.com). The Fed’s 2% target is just that—a target. Real-world inflation often runs higher.
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