What is inflation, and how is it impacting gen Z? – SCREENSHOT Media

What is inflation, and how is it impacting gen Z?

By Charlie Sawyer

Published Jun 30, 2023 at 01:12 PM

Reading time: 2 minutes

Every day, as I stroll through London on my way to the office listening to the Legally Blonde soundtrack and sporting an outfit that looks like it’s taken straight from an episode of Zoey 101, I think to myself: “I wonder how many people there are out there that have zero clue what inflation actually is.” These are the kind of musings I have before I’ve managed to locate an iced oat vanilla latte—or a double shot espresso if I’m feeling feisty.

Let’s be real, inflation is hella confusing but understanding what it’s about is supposedly key to adulting. A lot of us wander through life claiming to know what it means, when in reality, most of us are just making it up as we go along. So, as your friendly neighbourhood blonde, allow me to break it down in the easiest way possible.

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What does the word inflation mean?

In its most basic form—aka, the only kind I’m interested in—inflation refers to the rate at which prices increase over a period of time. Think of it as a big picture idea.

One really accessible way of thinking about it, is considering the way in which the cost of living crisis has impacted prices in the UK. The cozzie livs, as it’s known to gen Zers, has been a complete nightmare, and inflation plays a really big role in this.

If there is a high rate of inflation, things cost more. Picture yourself browsing the aisles at Tesco, you’re hunting down a packet of Wotsits, maybe some sausage rolls to go with it. You’re thinking that you’ll maybe need to spend £3 or so—I mean, that’s what it’s always cost. Well, think again. You approach the till and surprise, surprise, your total is a whopping £6.50. Now that, my sweet girls and gays, is inflation.

Why does inflation change?

The problem with this whole inflation malarkey is that it’s constantly changing, so if you don’t have a side piece or boo who works in asset management, then it’s incredibly hard to keep track of it.

Financial jargon and lingo feels pretty isolating when you’re wearing a crochet pink bolero and sipping some £5.50 wine on a random Tuesday evening. In reality, there are only a few things you really need to know about inflation and why it fluctuates.

It’s really all about supply and demand. If the economy is struggling, prices go up, but our wages stay the same, and so day-to-day living becomes far more squeezed. It becomes harder to save and it completely changes the way people approach borrowing money or applying for a loan.

Now, while I don’t think it’s helpful diving into things like mortgage rates or economic activity—for now anyway—the main thing you need to know is that when inflation is high, so are prices. In the UK, inflation is currently at 8.7 per cent, one of the highest rates we’ve ever experienced as a country. For context, a ‘good’ inflation rate would sit at about 2 per cent. So, it’s not looking great basically.

How can inflation be reduced?

Inflation can go down if governments decide to seriously increase taxes and cut back spending. Although that almost never actually works, and when they do increase taxes, it hits the middle man much harder than it does the CEO of Starbucks. Either way, it’s a hard thing to combat.

Inflation is a confusing topic, and it’s something people in the financial industry often don’t take the time to properly explain. But, fear not, your resident blonde will always be here to walk you through the most boring of subjects. I got you babe.

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