Budgeting · Video Lesson
Inflation Explained
Inflation is the general rise in prices over time, which lowers what your money can buy. This lesson explains what inflation is, why it happens, how it’s measured with the Consumer Price Index, how it affects savings, investments, and debt, and practical strategies to protect your money.
For Teachers
Lesson at a glance
- Topic
- Budgeting & Economics
- Grade Level
- Grades 7–12 + adult
- Resource Type
- Video Lesson + Worksheet
- Estimated Time
- 30–45 minutes
- Format
- Class discussion + analysis activity
- Materials
- Video, worksheet, calculators, whiteboard
What Students Learn
Learning objectives
- Define inflation and explain how it lowers purchasing power
- Identify causes of inflation (demand, supply, policy)
- Explain how inflation is measured with the Consumer Price Index (CPI)
- Describe how inflation affects savings, investments, and debt
- Apply strategies to protect money from rising prices
Video Lesson
Watch: Inflation Explained
Materials
What you’ll need
- Internet access for the video
- Printed copies of the worksheet quiz (one per student)
- Calculators for the price-change activity
- Whiteboard or projector
Key Terms
Vocabulary
- Inflation
- A general rise in prices over time that reduces purchasing power.
- Purchasing power
- How much your money can buy.
- Consumer Price Index (CPI)
- A measure of the average change in prices consumers pay over time.
- Deflation
- A general fall in prices (the opposite of inflation).
- Interest rate
- The cost of borrowing or the return on saving, which central banks adjust to influence inflation.
- Cost of living
- The amount needed to cover basic expenses, which rises with inflation.
For Teachers
Lesson plan
Estimated time: one 30–45 minute class period (extend with the price-analysis activity).
Lesson sequence
- Introduction (5 min). Ask if students have noticed prices rising over time. Introduce inflation and purchasing power.
- Watch the video (10 min). Play the lesson video. Ask students to note the causes and how inflation is measured.
- Discussion (12 min). Cover causes (demand, supply, policy), the CPI, how inflation affects savings/investments/debt, and the role of central banks and interest rates.
- Activity — price analysis (10 min). Students compare current prices of common items to prices from years ago, calculate the percent increase, and discuss the impact.
- Quiz (8 min). Students complete the printable quiz; the answer key is included for teacher use.
Assessment
Assess participation, the price-analysis activity, and the printable quiz.
This lesson is for educational purposes only and is not financial advice.
Discussion
Discussion questions
- What is inflation, and how does it affect the purchasing power of money?
- What are the main causes of inflation?
- How is inflation measured, and what is the CPI?
- How can inflation affect people differently depending on savings or debt?
- What are some strategies to protect your money from inflation?
Printable Quiz
Inflation Explained — Quiz & Answer Key
Multiple-choice quiz based on the video, with an answer key for teacher use.
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