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Financial Literacy

Inflation and Deflation

Hiya kids,

Hope we enjoyed every bit of the weekend? Because I did.
inflation
Today I will be talking about Inflation and Deflation….hmmmmmmmm. Those are two big words and they sound kinda scary, don’t they?

 Let’s start with inflation: Inflation is the increase in prices of the things you use. For example, last week you and your mum bought bread from your regular bakery for N200.Your mum sent you back to the bakery this week and she gave you N200. But when you got there, the baker tells you the price of the bread is now N250.And you are shocked! This is inflation and there are lots of reasons why this happens. Maybe the price of flour has gone up, so it costs the baker more money to make the bread.

 

Deflation, on the other hand, is the decrease in prices of the things you use.

If the price of bread drops, the baker may have to pay his employees less money because he is not making a profit anymore.But it means that you can also get bread for less than the N200!

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