{"id":13223,"date":"2022-07-12T18:40:42","date_gmt":"2022-07-12T13:10:42","guid":{"rendered":"https:\/\/kuvera.in\/blog\/?p=13223"},"modified":"2022-07-14T16:04:53","modified_gmt":"2022-07-14T10:34:53","slug":"inflation-and-real-returns","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/","title":{"rendered":"INFLATION AND REAL RETURNS"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_40 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" area-label=\"ez-toc-toggle-icon-1\"><label for=\"item-69d0fb0559c02\" aria-label=\"Table of Content\"><span style=\"display: flex;align-items: center;width: 35px;height: 30px;justify-content: center;direction:ltr;\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/label><input  type=\"checkbox\" id=\"item-69d0fb0559c02\"><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/#Inflation_Meaning\" title=\"Inflation Meaning\">Inflation Meaning<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/#Inflation_Rate_of_India\" title=\"Inflation Rate of India\">Inflation Rate of India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/#Real_Rate_of_Return\" title=\"Real Rate of Return\">Real Rate of Return<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/#Types_of_Inflation\" title=\"Types of Inflation\">Types of Inflation<\/a><ul class='ez-toc-list-level-4'><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4'><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/#_Semi-inflation\" title=\"\u00a0Semi-inflation\">\u00a0Semi-inflation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/#True_inflation\" title=\"True inflation\">True inflation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/#_Open_inflation\" title=\"\u00a0Open inflation\">\u00a0Open inflation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/#_Repressed_inflation\" title=\"\u00a0Repressed inflation\">\u00a0Repressed inflation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/#_Hyperinflation\" title=\"\u00a0Hyperinflation\">\u00a0Hyperinflation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/#_Creeping_and_moderate_inflation\" title=\"\u00a0\u00a0Creeping and moderate inflation\">\u00a0\u00a0Creeping and moderate inflation<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/#Causes_of_Inflation\" title=\"Causes of Inflation\">Causes of Inflation<\/a><ul class='ez-toc-list-level-4'><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4'><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/#Demand-pull\" title=\"Demand-pull\">Demand-pull<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/#Cost-push\" title=\"Cost-push\">Cost-push<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/#Built-in\" title=\"Built-in\">Built-in<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/#Inflation_and_Stock_Market_Returns\" title=\"Inflation and Stock Market Returns\">Inflation and Stock Market Returns<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/#Money_Market_Funds_MMF\" title=\"Money Market Funds (MMF)\">Money Market Funds (MMF)<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/#High_return_share\" title=\"High return share\">High return share<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/#FAQs\" title=\"FAQ\u2019s\">FAQ\u2019s<\/a><ul class='ez-toc-list-level-4'><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4'><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/#What_causes_inflation\" title=\"What causes inflation?\">What causes inflation?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/#What_to_do_to_fight_inflation\" title=\"What to do to fight inflation?\">What to do to fight inflation?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/#How_to_invest_during_inflation_to_get_high_returns\" title=\"How to invest during inflation to get high returns?\">How to invest during inflation to get high returns?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/#Interested_in_how_we_think_about_the_markets\" title=\"Interested in how we think about the markets?\">Interested in how we think about the markets?<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p><iframe loading=\"lazy\" title=\"YouTube video player\" src=\"https:\/\/www.youtube.com\/embed\/HkM48kXMF5s\" width=\"560\" height=\"315\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Inflation refers to a wide-ranging economic impact of price hikes, such as an overall increase in the cost of living in a nation. However, at times, inflation is also narrowly calculated for certain services and goods, such as an increase in the price of haircuts, foods, and other such items. Inflation has an impact on investments. Real return<\/span><span style=\"font-weight: 400;\"> is the annual profit percentage on an investment that has been prorated for inflation.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><a href=\"https:\/\/kuvera.in\/explore\/fixed-deposit\/c\/all\"><img loading=\"lazy\" class=\"size-large wp-image-13417 aligncenter\" src=\"https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2022\/07\/FD-Banner_14-July-2022-1024x334.jpg\" sizes=\"(max-width: 640px) 100vw, 640px\" srcset=\"https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2022\/07\/FD-Banner_14-July-2022-1024x334.jpg 1024w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2022\/07\/FD-Banner_14-July-2022-300x98.jpg 300w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2022\/07\/FD-Banner_14-July-2022-768x250.jpg 768w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2022\/07\/FD-Banner_14-July-2022.jpg 1080w\" alt=\"Online Fixed Deposits on Kuvera\" width=\"640\" height=\"209\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Inflation_Meaning\"><\/span>Inflation Meaning<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Inflation is the gradual loss of buying capacity of a particular currency. The increase in pricing, often stated in percentage (%) means that a currency unit buys less than what it did before.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">In simple terms, inflation reduces the money&#8217;s purchasing power, which means what you can buy with Rs. 100 today, you&#8217;ll not be able to buy the same thing in 2030 with the same amount.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Inflation_Rate_of_India\"><\/span>Inflation Rate of India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Following an 8-year high of 7.79 % in April 2022 and falling short of market predictions of 7.1 %, India&#8217;s annual <\/span><span style=\"font-weight: 400;\">inflation rate dipped<\/span><span style=\"font-weight: 400;\"> slightly to 7.04 % in <\/span>May 2022<span style=\"font-weight: 400;\">. For the fifth consecutive month, it did not fall within the RBI&#8217;s goal range of 2 to 6%.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">With the inflation rate increase in this unpredictable world, it&#8217;s best to plan your income and expenses. With the Kuvera website and mobile app, you can keep track of and understand how the market is moving so you can invest in <a href=\"https:\/\/kuvera.in\/explore\/mf\/c\/all\">mutual fund schemes<\/a> and <a href=\"https:\/\/kuvera.in\/explore\/stocks\/c\/all\">stock exchanges<\/a>.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Real_Rate_of_Return\"><\/span>Real Rate of Return<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">The percentage of profit made by an <a href=\"https:\/\/kuvera.in\/explore-invest\">investment<\/a> in a financial year is adjusted as per the prevailing inflation rate in the market. The remaining profit after the adjustment is known as the &#8220;<\/span>real rate of return.&#8221;<\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">It is only through the real rate of return, that the actual purchasing capacity of a given currency can be indicated.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">The <\/span>Cost Inflation Index,<span style=\"font-weight: 400;\"> or CII, is an index that is used to determine how much an asset&#8217;s value has increased after accounting for inflation. Only those assets that qualify for an inflation-adjusted cost will be determined using this amount (indexation benefit).<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Types_of_Inflation\"><\/span>Types of Inflation<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">There are various <\/span>types of inflation<span style=\"font-weight: 400;\"> patterns trending in other economies. They are as follows:<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li aria-level=\"1\">\n<h4><span class=\"ez-toc-section\" id=\"_Semi-inflation\"><\/span>\u00a0Semi-inflation<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">An economy may experience inflationary pressure even before reaching full employment\u2014where all people can find work\u2014as a result of bottlenecks in particular economic sectors. This is called semi-inflation.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">\n<h4><span class=\"ez-toc-section\" id=\"True_inflation\"><\/span>True inflation<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">This occurs when economic growth factors have been fully used. For instance, when the labour force is fully employed, national production becomes inelastic. As a result, more income just means more expenses, not greater output.<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">\n<h4><span class=\"ez-toc-section\" id=\"_Open_inflation\"><\/span>\u00a0Open inflation<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">This is the most basic type of hyperinflation, in which the price level grows continually and is apparent to the public. The yearly pace of rising prices is evident.<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">\n<h4><span class=\"ez-toc-section\" id=\"_Repressed_inflation\"><\/span>\u00a0Repressed inflation<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Let\u2019s imagine that there is surplus consumption in the industry. Generally, this condition results in a rise in prices. Therefore, the authorities can use punitive measures like price regulation, restrictions, and so on to avoid excess consumption by raising prices.<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">\n<h4><span class=\"ez-toc-section\" id=\"_Hyperinflation\"><\/span>\u00a0Hyperinflation<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Current prices rise at a quick pace during hyperinflation. Costs are expected to rise every hour. Typically, this results in an economy&#8217;s currency devaluation.<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">\n<h4><span class=\"ez-toc-section\" id=\"_Creeping_and_moderate_inflation\"><\/span>\u00a0\u00a0Creeping and moderate inflation<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ul>\n<p><strong>Creeping inflation <\/strong><span style=\"font-weight: 400;\">&#8211; In this situation, the price level rises steadily over a long time.<\/span><\/p>\n<p><strong>Moderate inflation<\/strong><i><span style=\"font-weight: 400;\"> &#8211; <\/span><\/i><span style=\"font-weight: 400;\">The level of price growth in this scenario is neither too quick nor too sluggish; it is reasonable.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Causes_of_Inflation\"><\/span>Causes of Inflation<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">The main <\/span>causes of inflation<span style=\"font-weight: 400;\"> are:<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li aria-level=\"1\">\n<h4><span class=\"ez-toc-section\" id=\"Demand-pull\"><\/span>Demand-pull<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Demand-pull Inflation occurs when insufficient items or resources are being provided to increase supply, leading to costs inflating. For instance, if component prices rise, so does the cost of manufacturing. This causes the price levels to rise as well. Higher demand and less adaptable supply lead to a demand-supply mismatch, which raises prices.<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li aria-level=\"1\">\n<h4><span class=\"ez-toc-section\" id=\"Cost-push\"><\/span>Cost-push<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Cost-push inflation is a result of price hikes arising due to an increase in raw and intermediary products used in the production of goods. For instance, costs for all intermediate goods increase when more money and credit are directed toward the commodity or other asset markets.\u00a0\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li aria-level=\"1\">\n<h4><span class=\"ez-toc-section\" id=\"Built-in\"><\/span>Built-in<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Consider this situation: The cost of goods and services is rising, and as a result, workers and other people begin to demand higher wages to maintain their quality of life. The cost of goods and services rises because of their increased earnings, and this wage-price spiral keeps going as one element drives the other and vice versa.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Inflation_and_Stock_Market_Returns\"><\/span>Inflation and Stock Market Returns<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Investors need to know how <\/span>stock market returns<span style=\"font-weight: 400;\"> usually work and what that could mean for their portfolios&#8217; long-term growth.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">For instance, throughout the period, the <a href=\"https:\/\/kuvera.in\/blog\/how-to-invest-in-the-share-market\/\">share market<\/a> has earned an average of 10% every year, or 7% when inflation is included. Long-term traders can use previous <a href=\"https:\/\/kuvera.in\/explore\/stocks\/c\/all\">stock market<\/a> results for a year to effectively manage their investments.\u00a0\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Research has shown that every country has had its worst real returns during times of high inflation.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Money_Market_Funds_MMF\"><\/span>Money Market Funds (MMF)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Money Market Funds are loan funds that credit businesses for up to a year. These investments are created in such a way that the fund manager may generate better returns while minimising risk. A money market fund is a type of managed fund specialising in short-term, highly liquid assets.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"High_return_share\"><\/span>High return share<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Excess returns are those that are achieved above and beyond the return of a proxy. The study of excess returns will be based on a selected investment return comparison.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">A riskless rate and benchmarks with risk levels comparable to the investment under consideration are two of the simplest return comparisons.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">You can visit <\/span><a href=\"https:\/\/kuvera.in\/\"><span style=\"font-weight: 400;\">Kuvera&#8217;s official website<\/span><\/a><span style=\"font-weight: 400;\"> and go through various investment schemes, mutual funds, <a href=\"https:\/\/kuvera.in\/explore\/fixed-deposit\/c\/all\">FDs<\/a>, RDs, and other investing tools. You can even set your financial goal and work on it with Kuvera.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQ\u2019s<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<ul>\n<li aria-level=\"1\">\n<h4><span class=\"ez-toc-section\" id=\"What_causes_inflation\"><\/span>What causes inflation?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Three significant factors cause inflation: built-in inflation, cost-push inflation, and demand-pull inflation.<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li aria-level=\"1\">\n<h4><span class=\"ez-toc-section\" id=\"What_to_do_to_fight_inflation\"><\/span>What to do to fight inflation?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">You can save yourself from the effects of inflation by planning your finances.<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li aria-level=\"1\">\n<h4><span class=\"ez-toc-section\" id=\"How_to_invest_during_inflation_to_get_high_returns\"><\/span>How to invest during inflation to get high returns?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Investors should invest in small-cap and mid-cap funds to get high returns during inflation. The way these funds have performed on the market over the past few years shows that they can keep up with inflation.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Interested_in_how_we_think_about_the_markets\"><\/span>Interested in how we think about the markets?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>&nbsp;<\/p>\n<p>Read more: <a href=\"https:\/\/kuvera.in\/blog\/category\/zen-and-the-art-of-investing\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>Zen And The Art Of Investing<\/strong><\/a><\/p>\n<p>Check out all our &#8220;Investor Education Originals&#8221; videos on Youtube and get smart about investing.<\/p>\n<p>&nbsp;<\/p>\n<p><iframe loading=\"lazy\" title=\"SIP for the right start to your dreams | Best of Investor Education\" width=\"640\" height=\"360\" src=\"https:\/\/www.youtube.com\/embed\/8uwn1YpSsFU?list=PLDSzQdT9nLmBOsyCmLDKSz_PQcWdePZgI\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture\" allowfullscreen><\/iframe><\/p>\n<p>&nbsp;<\/p>\n<p>Start investing through a platform that brings goal planning and investing to your fingertips. Visit <a href=\"http:\/\/app.kuvera.in\"><strong>Kuvera.in<\/strong><\/a> to discover <a href=\"https:\/\/kuvera.in\/blog\/direct-plans-better\/\"><strong>Direct Plans<\/strong><\/a> and <strong><a href=\"https:\/\/app.kuvera.in\/explore\/fixed-deposit\/c\/all\">Fixed Deposits<\/a><\/strong> and <a href=\"https:\/\/kuvera.in\/user\/login\"><strong>start investing today.<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&nbsp; Inflation refers to a wide-ranging economic impact of price hikes, such as an overall increase in the cost of living in a nation. However, at times, inflation is also narrowly calculated for certain services and goods, such as an increase in the price of haircuts, foods, and other such items. Inflation has an impact [&#8230;]<\/p>\n<p><a class=\"btn btn-secondary understrap-read-more-link\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/\">Read More&#8230;<\/a><\/p>\n","protected":false},"author":11,"featured_media":13235,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false},"categories":[99,593],"tags":[248,1000,831,68,1113],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>INFLATION AND REAL RETURNS - Kuvera<\/title>\n<meta name=\"description\" content=\"Inflation and real returns refers to a economic impact of price hikes, such as an overall increase in the cost of living in a nation.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/kuvera.in\/blog\/inflation-and-real-returns\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"INFLATION AND REAL RETURNS - 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