Inflation
Planning & BudgetingThe rate at which the general price level of goods and services rises, reducing purchasing power over time.
Example
Example: At 3% annual inflation, something that costs $100 today will cost $134 in 10 years, $181 in 20 years, and $243 in 30 years. Your $50,000 salary needs to grow to $67,000 in 10 years just to maintain the same purchasing power. This is why cost-of-living raises matter — a 2% raise with 3% inflation is actually a 1% pay cut in real terms.