“If you get $1,000 per month in pension income that is not adjusted each year for inflation, then it will buy you $1000 worth of goods in 25 years assuming no inflation.

But, at 2 per cent for 25 years, which is pretty much what we are getting now, the purchasing power of your $1,000 decays to a mere $610. You go to a store with a cheque that says $1,000 and you can only purchase $610 worth of groceries. Where did the other $390 go? That’s inflation. And, if inflation averages 4 per cent per year, your purchasing power is reduced to almost $375.” Read more. 

“What’s the Bigger Worry: Inflation or Deflation?” 
Moshe Milevsky 
The Star, November 18, 2010. 

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