Dadu loves telling the same story every time the family orders snacks.
“In my day,” he says, holding up a samosa, “this cost one rupee. One! And it was bigger.”
Everyone rolls their eyes. But he’s not lying. Decades ago, a samosa really did cost about a rupee. Today, it costs many times that.
Here’s the strange part. The samosa didn’t become a luxury item. It’s the same fried, spicy triangle it always was. What changed is the money. Over the years, each rupee slowly lost its buying power.
That’s inflation.
So what is it, really?
Inflation means prices go up over time. Groceries, fuel, rent, school fees, all of it. When prices rise, each rupee in your pocket buys a little less than before.
It doesn’t happen in one big jump. It happens slowly, like a tap dripping. You barely notice from month to month, but over years the effect is huge.
Economists measure it as a percentage per year. If inflation is 10%, something that cost 100 rupees last year would cost around 110 today.
Why does it happen?
There are a few common reasons, and it’s usually a mix.
Demand goes up faster than supply. When lots of people want something and there isn’t enough of it, sellers can charge more.
Costs go up for businesses. If fuel, electricity or raw materials get pricier, companies often pass that on to customers.
More money moves around in the economy. When there’s more money chasing the same amount of goods, prices tend to rise.
You don’t need to memorize all of that. Just remember the big idea: prices drift upward, and money loses strength.
Why should you care?
Because inflation quietly eats your savings.
Say you hide 10,000 rupees in a drawer. It’ll still be 10,000 rupees next year. But if prices have gone up, those same notes will buy less. Your money didn’t disappear. Its power did.
This is one big reason people invest. If your money grows faster than prices rise, you’re staying ahead. If it grows slower, or doesn’t grow at all, you’re slowly falling behind.
Inflation also affects how you plan. A goal that costs 500,000 rupees today will likely cost more in five years. Good planning accounts for that.
A quick example
Let’s use simple, made-up numbers. Suppose a basic lunch costs 500 rupees, and inflation is 10% a year.
You have 10,000 rupees. Today, that pays for 20 lunches.
A year later, the same lunch costs 550. Your 10,000 now covers only about 18 lunches.
After five years of the same inflation, that lunch costs around 805 rupees. Your 10,000 buys just 12 lunches or so.
The notes in your drawer haven’t changed. Not a single rupee is missing. But you’ve lost nearly half your lunches.
Now imagine that same money had been growing at 10% or more a year. It would have kept up with prices, and maybe even beaten them. That’s the difference between letting money sit and putting it to work.
The takeaway
Inflation is why Dadu’s samosa cost a rupee. It’s slow, it’s steady, and it works quietly against anyone who leaves their money idle for too long. You can’t stop it, but you can plan around it. Keep what you need safe, and let the rest grow, so your money keeps its strength as prices rise.
