Inflation is the rise in cost of goods and services over time. It is also your money's biggest enemy.
The Consumer Price Index (CPI) measures the change in the cost of a fixed basket of goods and services, and includes housing, electricity, food, and transportation. It is also called the cost-of-living index. Government aims to keep the inflation rate between 3% and 6% a year.
It doesn’t matter how hard you’ve worked, inflation slowly eats away at your money as time goes by. Because of this, you pay more for goods and services than you did the year before.
The best thing you can do is to add a yearly payment increase to your insurance or savings plan to help your money keep up with inflation. We call this yearly payment increase a value protection benefit.
An example of inflation is how the cost of a McDonalds burger has increased over time:
A Big Mac burger would cost a consumer R17,95 on average in 2009 in South Africa. In 2019 the average cost of a Big Mac was R 31.00. If the value of your money did not grow over time, you would not have been able to afford a Big Mac burger in 2019 for the same amount of money you had in 2009.