Prices are speeding up again. On 14 October 2026 the US Bureau of Labor Statistics reported that consumer prices in September were 3.7% higher than a year earlier, up from 3.4% in August. Two days later Eurostat confirmed euro-area inflation at 3.8%, against 2.2% in September 2025. The UK followed on 21 October with 3.5%. Energy did most of the pushing in all three.
Those numbers are the reason for this lesson on inflation and purchasing power. Inflation is a rise in the general level of prices, so each dollar, euro or pound buys a little less than it did. Crypto changes a few things in that picture. Bitcoin’s supply follows a schedule no central bank can touch, and dollar stablecoins let people in Argentina or Turkey hold something steadier than their own currency. What crypto does not change is the money your rent, your salary and your tax bill are written in.
This is the fourth lesson of our money and economics path, after our lesson on fiat money and central banks, which explains who issues state money and why it has value. Here you will see how inflation is measured, how to work out what your savings have lost since 2000, what happened to Bitcoin in 2022 when inflation hit 40-year highs, and why “inflation” means something else when a crypto project uses the word. Figures are as of October 2026. Nothing here is investment advice.
Inflation and purchasing power are two readings of the same number
Purchasing power is the amount of goods and services one unit of money can buy. Inflation is the speed at which that amount shrinks. When US prices rise 3.7% in a year, a basket that cost $100 in September 2025 costs about $103.70 in September 2026. Turn it around and the same $100 bill now buys about 96.4% of what it bought a year earlier.
The word covers the general level of prices, not one price. Petrol jumping after a refinery fire is a price change. Inflation is when the average of thousands of prices, weighted by what households actually spend, keeps moving up.
Small rates add up because they compound. At 2% a year, prices double in about 35 years. At 3.7% they double in about 19 years (our calculation). That is why central banks fight over a point or two: over a working life the gap decides whether savings kept in cash hold their value or lose half of it.
Where the money comes from, and who can create more of it, is the subject of the previous lesson and of the next one, on how banks create money. This lesson stays on the other end: what that money buys.
How inflation is measured: a basket, an index and a percentage
Statisticians do not measure “the value of money” directly. They price a fixed basket of goods and services every month and track its cost. The BLS describes its Consumer Price Index as “a measure of the average change over time in the prices paid by urban consumers” (BLS Handbook of Methods). Its survey collects about 94,000 prices and 8,000 rental housing unit quotes each month.
The results become an index, not a price. The US CPI for all urban consumers (CPI-U) uses 1982-84 as 100. In September 2026 it stood at 336.940, against 324.800 in September 2025 (BLS table 1). Divide one by the other and you get 1.037: the 3.7% in the headline.
Headline and core inflation
The headline figure includes everything. Core inflation leaves out food and energy, whose prices swing with weather, wars and harvests, to show the slower trend underneath. In September 2026 the gap was wide: US headline 3.7%, core 2.6%, with energy prices up 20.4% over 12 months. The same pattern shows in France, where Insee put core inflation at 1.5% against a headline of 3.1%.
Why one country can publish two inflation rates
Most European countries publish a national index and a harmonised one. The harmonised index of consumer prices (HICP) follows common EU rules so that Lisbon can be compared with Helsinki. In France, Insee reported 3.1% on its national index (IPC) and 3.4% on the harmonised one (IPCH) for the same month of September 2026. Italy’s statistics office, Istat, likewise publishes a national index (NIC) next to the harmonised IPCA.
The UK publishes CPI, built to international standards and used for the Bank of England’s 2% target, and CPIH, which adds the housing costs of people who own their home. In September 2026 the Office for National Statistics reported CPI at 3.5% and CPIH at 3.6%. In the US, the Federal Reserve targets yet another measure, the personal consumption expenditures (PCE) price index, not the CPI.
Your own inflation is not the average
An index is an average household that does not exist. Someone who drives 40 miles a day felt the 2026 fuel spike far more than someone who walks to work. A renter sees rent; a homeowner with a fixed-rate mortgage does not. Pensioners spend more on energy and health, students more on rent and phones. The official rate is a good yardstick for the economy and a rough one for any single budget.
| Area | Index | September 2026 | August 2026 | Published |
|---|---|---|---|---|
| United States | CPI-U (BLS) | 3.7% | 3.4% | 14 Oct 2026 |
| Euro area | HICP (Eurostat) | 3.8% | 3.2% | 16 Oct 2026 |
| France | IPC (Insee) / HICP | 3.1% / 3.4% | 2.4% / 2.6% | 15 Oct 2026 |
| Italy | HICP (Eurostat) | 4.2% | 3.2% | 16 Oct 2026 |
| United Kingdom | CPI / CPIH (ONS) | 3.5% / 3.6% | 3.1% / 3.3% | 21 Oct 2026 |
| Argentina | IPC (INDEC) | 33.4% | 33.5% | 13 Oct 2026 |
| Turkey | CPI (TurkStat, via central bank) | 29.73% | 31.51% | Oct 2026 |
Annual rates, 12 months to the month shown. Sources: BLS, Eurostat, Insee, ONS, INDEC, Central Bank of the Republic of Türkiye.
Inflation in October 2026: energy is the driver again
Every release this month tells a similar story. In the euro area, energy prices were up 18.9% on a year earlier in September, from 14.3% in August, and energy alone added 1.71 percentage points to the 3.8% total, according to Eurostat. In France, energy rose 21.3% while manufactured goods were slightly cheaper than a year before. In the UK, the ONS said the largest upward contribution came from transport, “particularly motor fuels”.
Central banks have reacted. On 16 September 2026 the Federal Reserve raised its target range for the federal funds rate to 3.75%-4.00%, with a statement that opened its assessment bluntly: “Inflation remains elevated.” (Federal Reserve, 16 September 2026). The European Central Bank’s deposit facility rate has been 2.50% since the same day (ECB). The Bank of England held Bank Rate at 3.75% at its September meeting; its next decision is due on 5 November 2026 (Bank of England).
For contrast, two countries live with inflation at another scale. Argentina’s statistics office INDEC reported on 13 October 2026 that prices rose 1.9% in September alone and 33.4% over 12 months (INDEC technical report). Turkey’s annual rate was 29.73% in September 2026, down from 85.51% in October 2022 (central bank inflation table). Those are the places where crypto use is most tied to inflation, as section 10 shows.
The next US figure, for October, is due on 10 November 2026 at 8:30 a.m. Eastern time, according to the BLS release schedule.
What 100 dollars of the year 2000 buys today
This is where inflation and purchasing power stop being abstract: you can check what has happened to your own currency in two minutes. Take the price index for the start month and the end month, and divide. For the US, CPI-U was 168.8 in January 2000 and 336.940 in September 2026. The ratio is 1.996: you need about $199.60 today to buy what $100 bought in January 2000. Turned around, $100 today buys roughly what $50.10 bought then. The dollar has lost about half its purchasing power in under 27 years.
The BLS inflation calculator does the same sum for any two months since 1913. Its result can differ by a few cents from ours depending on the latest month loaded. If you start from the 2000 annual average (172.2) instead of January, the answer drops to about $195.70. Always say which months you compared.
France offers a similar tool. Insee’s euro-franc converter covers every year from 1901 and works on annual averages. Its own worked example says 10,000 euros in 2025 are worth 43,345.64 francs of 2000. At the fixed rate of 6.55957 francs per euro, that is about 6,608 euros of 2000, so 100 euros of 2000 equal roughly 151 euros of 2025 (our arithmetic from Insee’s example). Insee warns the result is indicative and cannot serve as an official reference in legal matters.
Why is the French figure so much lower than the American one? Different baskets, a different currency, a different end point (2025 annual average against September 2026) and different inflation histories. Comparing countries this way is useful only when the method is the same.
From 2% to 11%: the inflation wave of 2021 to 2023
US consumer prices rose 9.1% in the 12 months to June 2022, the largest increase since November 1981, with energy up 41.6% and food up 10.4% (BLS). By December 2022 the US rate had eased to 6.5% (BLS release of 12 January 2023).
Europe peaked later and higher. Eurostat’s release of 17 November 2022 put euro-area inflation at 10.6% in October 2022, up from 4.1% a year earlier, with energy contributing 4.44 percentage points. Italy reached 12.6% on the harmonised measure and France 7.1%, the lowest rate in the EU that month. The UK’s CPI hit 11.1% in October 2022, the highest since the series began in 1997, with food prices up 16.4% (ONS). French national inflation peaked in February 2023 at 6.3%, with food up 14.8% (Insee).
| Area | Peak annual rate | Month | Measure |
|---|---|---|---|
| United States | 9.1% | June 2022 | CPI-U |
| Euro area | 10.6% | October 2022 | HICP |
| Italy | 12.6% | October and November 2022 | HICP |
| United Kingdom | 11.1% | October 2022 | CPI |
| France | 6.3% (HICP 7.3%) | February 2023 | IPC |
Energy and food led the rise everywhere, and central banks answered by raising interest rates. The 2026 rise is smaller so far, but it starts from the same place: fuel and power bills.
When inflation runs away: Weimar, Zimbabwe, Venezuela and Argentina
At 3% or 10% a year, money still works. Hyperinflation is when it stops working. The German Bundestag’s history service recounts that a loaf of bread cost 250 marks in January 1923 and 201 billion marks in November. At the peak that month, one US dollar was worth 4.2 trillion marks. A new currency, the Rentenmark, was issued from 15 November 1923 at one Rentenmark for one trillion paper marks.
Zimbabwe went further. By mid-2008 its statistics had stopped tracking prices, so the economists Steve Hanke and Alex Kwok rebuilt the figures themselves from exchange rates, using purchasing power parity. In their 2009 Cato Journal paper, they estimated that monthly inflation peaked in mid-November 2008 at 79.6 billion percent, with prices doubling every 24.7 hours. Their table ranks it second in history, behind Hungary in July 1946. It is an estimate by two researchers, not an official statistic.
Venezuela shows how disputed the numbers can get. On 29 May 2019 its central bank published 2018 inflation of 130,060% (Central Banking). The IMF had estimated about 1,370,000% for the same year, roughly ten times more (WION).
Argentina lived through 211.4% inflation in 2023, the highest annual rate since 1990, and 25.5% in December 2023 alone, according to INDEC figures reported by the fact-checking site Chequeado. By September 2026 the rate had fallen to 33.4%: high by any European standard, low by Argentina’s recent one.
| Country | Figure | Period | Source |
|---|---|---|---|
| Germany | 1 dollar = 4.2 trillion marks | November 1923 | Bundestag |
| Zimbabwe | about 79.6 billion % in a month | mid-November 2008 | Hanke and Kwok (estimate) |
| Venezuela | 130,060% (IMF estimate about 1,370,000%) | 2018 | Central bank; IMF via WION |
| Argentina | 211.4% | 2023 | INDEC via Chequeado |
| Turkey | 85.51% | 12 months to October 2022 | TurkStat via central bank |
In each case people stopped holding the local currency for longer than they had to. They priced in dollars, bought goods as soon as wages arrived and kept savings abroad or in cash dollars. That reflex is the background to the crypto use described below.
Deflation is the opposite problem, and the 2% target is the buffer
Why the Fed, the ECB and the Bank of England all aim for 2% rather than zero is covered in our lesson on fiat money and central banks. One reminder is enough here: a small positive rate leaves room to cut interest rates in a downturn and keeps the economy away from deflation.
Deflation, a fall in the general price level, sounds like good news at the checkout. It is hard on anyone with a loan. A mortgage of 200,000 stays at 200,000 while prices and often wages drift down, so the debt takes a bigger bite of each pay slip. Buyers who expect lower prices next month also have a reason to wait, and spending that waits is income that a shop or a builder does not get.
For savers the target has a plain consequence. Even when central banks hit 2% exactly, cash in a drawer loses about a third of its purchasing power over 20 years (our calculation: 1 divided by 1.02 to the power of 20 gives 0.67). That loss is built into the system, and it is the yardstick any asset, crypto included, has to be measured against.
What crypto changes: a supply schedule no committee can vote on
Bitcoin was designed with a hard cap. New coins are created by blockchain e riceve una ricompensa, rendendo carissimo riscrivere lo storico.">mining until there are 21 million bitcoins, and each one divides into 100,000,000 units called satoshis (bitcoin.org). The reward per block halves about every four years, a rule explained in our glossary entry on the Bitcoin halving. The last halving, in April 2024, cut it from 6.25 to 3.125 BTC; the next, expected around 2028, will cut it to 1.5625.
About 20.1 million BTC existed on 21 October 2026, according to Blockchain.com data. At 3.125 BTC a block and about 144 blocks a day, miners add roughly 164,000 BTC a year: about 0.8% of the supply, and falling at each halving (our calculation). That figure is what people mean by “Bitcoin’s inflation rate”.
No central bank can change that schedule, and changing it would need the agreement of the people who run the network’s software. That is a real difference from the dollar or the euro, whose supply responds to policy and to bank lending. But a fixed number of coins says nothing about what one coin will buy. The supply is fixed; the price in dollars is not.
Is Bitcoin an inflation hedge? What 2022 showed
A hedge against inflation should hold its purchasing power when consumer prices rise. 2022 offers the clearest test so far, because inflation in the US and the UK reached levels not seen since the early 1980s and euro-area inflation passed 10%. Bitcoin opened the year at $46,311.75 on 1 January 2022 and closed it at $16,547.50 on 31 December, a fall of 64.2% in dollars, according to CoinMarketCap data compiled by DQYDJ. In the same year US inflation peaked at 9.1%, euro-area inflation at 10.6% and UK inflation at 11.1%.
So in the year of the highest inflation since the early 1980s, Bitcoin lost almost two thirds of its dollar value. 2022 was also the year central banks raised rates quickly, and assets seen as risky fell across the board. A fixed supply did not stop that.
Research points the same way, with caveats. A paper by Muhammad Aman, Amjad Ali and Marc Audi, using data from 2015 to 2024 across countries, found that Bitcoin returns show no significant correlation with inflation and concluded that “Bitcoin does not effectively hedge against inflation” (MPRA working paper). One paper is not the last word on the question.
Longer periods are where it gets slippery. Bitcoin traded near $81,900 at 08:43 UTC on 22 October 2026, according to Coindaro market data: above its level of 1 January 2022 in nominal dollars, while US prices also rose over the same years. Choose another start date and the answer flips. A price on one day proves nothing about protection. Our page on crypto myths and facts looks at the “digital gold” claim in more detail.
Stablecoins are how high-inflation countries actually use crypto
Where inflation is severe, the crypto people reach for is usually not Bitcoin but the dollar in token form. Chainalysis’ Latin America report of 23 September 2026 found that Argentina recorded $88.5 billion of crypto activity in the 12 months to 30 June 2026, up 15.3%, the second largest total in the region after Brazil. The number of Argentine wallets holding at least $10,000 in stablecoins rose 82% since July 2024. Across Latin America, stablecoins made up 32.1% of cross-border value. The report’s takeaway: “stablecoins are becoming a more important part of how Latin Americans move, hold, and access cryptocurrency”.
The firm’s 2026 global adoption index ranks Türkiye 20th of 117 countries and reports that domestic person-to-person stablecoin activity grew 377.7% worldwide.
The logic is plain. A peso losing a third of its value a year is a worse store of value than a dollar losing 3.7%. A dollar token such as Tether (USDT) lets someone in Buenos Aires or Istanbul hold dollars on a phone without a US bank account. It does not protect against dollar inflation, which is 3.7% as of September 2026. It adds the risk that the issuer fails or freezes funds, and local rules may restrict it. Our guide to stablecoins explains how they hold their peg and where that can break.
Token inflation means new supply, not rising prices
Crypto projects use “inflation” in another sense: the rate at which new tokens are created. It has nothing to do with the price of bread. A token with 5% inflation adds 5% more units each year, usually paid to those who secure the network.
Ethereum is the main example. Since the Merge in 2022, new ether goes only to validators who stake it. According to ethereum.org, stakers receive about 1,700 ETH a day (an estimate based on about 14 million ETH staked), and total issuance fell by about 88%, from about 4.61% a year to about 0.52%. Part of every transaction fee, the base fee, is burned and leaves the supply. The same page says an average gas price of at least 16 gwei over a day “brings net ETH inflation to zero or less for that day”.
Whether the burn wins depends on network activity. On the morning of 22 October 2026 Etherscan showed a total supply of about 122.15 million ETH, with about 4.42 million ETH paid as staking rewards and about 4.64 million ETH burned in fees so far. Ether supply rises in quiet periods and can shrink in busy ones.
This matters for staking. A staking reward of 3% looks like interest, but if the token supply grows 3% a year, the holder’s share of the network stays flat. It is the same logic as a savings account paying 1.7% while prices rise 3.1%: what counts is the real return. Supply rules of this kind are part of a project’s tokenomics, the subject of a later lesson.
What crypto does not change: prices, wages and taxes stay in your currency
Your landlord, your employer and your tax office count in dollars, euros or pounds. That decides how crypto meets your budget.
In the US, the IRS states: “For U.S. tax purposes, digital assets are considered property, not currency.” (IRS). Selling or spending them triggers a capital gain or loss measured in dollars, short-term if held a year or less and long-term beyond that, reported on Form 8949. A coin that kept pace with inflation in nominal dollars can still create a taxable gain, so the tax is owed on the nominal rise, not the real one. Tax in the UK and the euro area is likewise computed in pounds or euros.
Volatility is the other constant. A 64% fall in one calendar year, as in 2022, is seven times the 9.1% peak of US inflation that same year. Converting between crypto and cash also costs fees and spreads at each step.
Savings rates against inflation in October 2026: the real rate
The real interest rate is the nominal rate minus inflation. It tells you whether money kept in an account gains or loses purchasing power. A few reference points, given as dated facts and not as recommendations:
- US Series I savings bonds issued from 1 May to 31 October 2026 pay a composite rate of 4.26%, made of a fixed 0.90% and an inflation part that resets every six months; new rates are announced on 1 November 2026 (TreasuryDirect).
- Treasury inflation-protected securities (TIPS) pay a yield on top of US inflation. The 10-year TIPS yield, already a real yield, was 2.77% on 20 October 2026, according to Federal Reserve data published on FRED (series DFII10).
- The Fed funds target range of 3.75%-4.00% sits just above US CPI inflation of 3.7%: a real policy rate close to zero.
- UK Bank Rate of 3.75% compares with CPI inflation of 3.5% in September 2026.
- In France, the tax-free Livret A pays 1.7% for the period from 1 August 2026 to 31 January 2027 (Service-Public), against national inflation of 3.1%: a real rate of about minus 1.4 points.
Real rates change every month, because both sides of the subtraction move. They are the everyday link between inflation and purchasing power for anyone with savings. The comparison shows the method, not where to put money.
Five checks to take from this lesson
- Read the official release for your country (BLS, ONS, Eurostat, Insee or Istat) and note both the headline and the core rate.
- Measure purchasing power with an official calculator and say which months you compared.
- Judge any asset against your own currency’s purchasing power over a stated period, not against its own past highs.
- Treat “the supply is fixed” and “the price protects me” as two separate claims; the first is code, the second is market history.
- Remember that a dollar stablecoin carries dollar inflation and issuer risk with it.
The next lesson, how banks create money, explains where most of the dollars and euros counted by these indexes come from in the first place.
