A nominal figure and a real outcome
If a salary rises from €1,500 to €1,560, it has increased by four per cent nominally. If the relevant consumer basket rose five per cent over the same period, the amount of goods and services it buys has roughly fallen. The real outcome depends on the chosen index and actual spending.
The same principle applies to savings, returns and debt. A zero-interest account preserves the nominal balance, not necessarily purchasing power. Fixed debt may shrink in real terms as general prices and wages rise, but only if the borrower's income also grows and rates or terms do not change.
What inflation measures
A consumer price index tracks the changing cost of a representative basket of goods and services. The euro area uses the harmonised HICP so countries can be compared. Basket weights draw on household spending, and the methodology addresses quality changes and product substitution.
The index is an average, not any one household's price tag. A household spending heavily on energy and housing may experience a different change from one with another budget. One food item may rise as electronics fall. A single sharp price move therefore does not prove equal general inflation.
Why prices change
The price level can rise with strong demand, constrained production, costlier energy and imports, wage and tax changes, credit conditions and expectations. Money and credit matter, but their relationship to prices runs through spending, economic capacity, velocity and behaviour. One cause cannot explain every inflation episode.
Many central banks pursue low, stable, positive inflation. The ECB targets two per cent over the medium term. Supporters stress room against deflation and wage adjustment; critics stress cumulative purchasing-power loss and uneven effects. The target is not a promise of exactly the same rate each year.
- one price change is not the same as a change in the overall price level
- an official index is a reproducible average, not a personal budget
- a real return roughly compares nominal return with inflation; an exact calculation uses compounding
Bitcoin and purchasing power
New Bitcoin issuance is predictable under the protocol and total units are limited by consensus rules. That removes discretionary issuance by one authority. It does not remove changes in demand, regulation, liquidity, technical risk or large market-price swings.
Bitcoin can gain substantially against a consumer basket over some long periods and fall sharply over others. It cannot honestly be described as stable purchasing-power protection over every horizon. A precise claim states the dates, currency, index and costs of buying and custody.