Inflation is an economic numerical indicator that characterizes the depreciation of money over a certain period. You can determine it yourself by comparing the cost of a consumer basket a year or a month ago with what it is worth today. In the first case, it will be real annual inflation, in the second - monthly inflation. It can be predicted in order to find out when there will be inflation and have time to save your money savings, having time to transfer them into more stable assets.
Instructions
Step 1
The inflation rate in economic statistics is determined by the inflation index. Moderate inflation, the index of which does not exceed 10%, is usually included in all futures transactions. With long-term investments, galloping inflation is especially dangerous, the coefficient of which can be from 10 to 100%. Such indicators can negate the whole point of investing money in a business. Hyperinflation rates in excess of 100% are a sign of imminent economic disaster that could completely destroy a country's economy, banking system and industry. With galloping and hyperinflation, you can expect a fall in the ruble at any moment, which can cause a depreciation of ruble bank deposits and investments.
Step 2
Forecasting inflation, which leads to changes in discount rates, is an occupation for economists and financial analysts. To find out when inflation will be and what its expected rates are, a variety of mathematical models are used, from simple to complex. They take into account information from the past, time series models.
Step 3
One of the reliable criteria by which one can judge the expected inflation rate is the M2 monetary aggregate, which is published on its website by the Central Bank of the Russian Federation. It represents the amount of cash in circulation of the citizens of the country, balances of ruble funds in the accounts of non-financial and financial (except for credit) organizations and resident individuals. Compare the indicators of M2 for the last time - the current year or month, express them as a percentage. Subtract the percentage of growth in gross domestic product - GDP from this indicator. This is the amount of goods and services produced. The difference between the change in M2 and GDP of more than 20% guarantees a high probability of the continuation of inflationary processes.
Step 4
An immediate drop in bond prices and an increase in precious metals prices, as well as cyclical stocks in forestry and chemical companies, are signs of rising inflation. At such times, there is a decline in the value of those investments that are sensitive to changes in interest rates. If you are going to make a long-term investment, consider these factors and control the level of inflation and risks associated with each specific instrument.
