How does inflation typically impact the standard of living in an economy experiencing economic growth?

Inflation refers to the general increase in prices of goods and services over time, which can affect how much people can buy with their money. When an economy is growing, people often earn more money, but if inflation rises too quickly, those higher salaries might not keep up with the increasing prices. This means that even though people have more income, they might not feel wealthier because their purchasing power is reduced. For example, if someone gets a raise of 5% but inflation is at 6%, they can actually buy less than before, which can lower their standard of living. Therefore, in a growing economy, it’s important to manage inflation so that people can enjoy the benefits of their increased earnings.