How Inflation Changes Future Costs
Inflation reduces purchasing power by increasing the nominal cost of goods and services over time.
Compounding effect
An annual inflation rate compounds when estimating costs several years into the future.
Use estimates carefully
Inflation varies by category and year, so a single assumed rate is only a planning approximation.
Practical takeaway
Use the metric that matches the business question you are trying to answer. When several metrics describe different stages of the same workflow, compare them together rather than optimizing one in isolation.
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