Inflation explained simply: why your PLN 100 is worth less today
A plain-language look at what inflation is, how it is measured and what you can do with your money.
Inflation is a rise in the average level of prices in an economy. When it goes up, the same amount of money buys less than before.
What inflation is
When the prices in a shopping basket rise, we call it inflation. If a basket that cost PLN 100 a year ago costs PLN 105 today, inflation is 5% a year.
How it is measured
Statisticians collect the prices of hundreds of products and services (food, energy, transport, housing) and weight them by how much an average household spends on them. The result is the consumer price index (CPI).
What it means for your wallet
Savings kept without interest lose real value. With 5% inflation, after a year PLN 1000 “buys” what about PLN 952 bought before. So it matters not only how much you save but also where.
What you can do
- Track your own spending and see which categories are getting more expensive.
- Compare savings account interest with inflation.
- Keep your emergency fund in an interest-bearing account, not in cash.
Educational material, not financial advice.