How can inflation affect purchasing power?

Inflation affects purchasing power by decreasing it. When the general price levels of goods and services rise, each unit of currency buys fewer goods and services than before. This reduction in the value of money means that consumers can afford to purchase less with the same amount of income, effectively eroding their purchasing power. As prices rise, if wages and incomes do not increase at the same rate, individuals and families find that their ability to buy the same amount of goods and services diminishes. This is particularly significant for those with fixed incomes, whose purchasing power is especially vulnerable to inflationary pressures. Therefore, the statement that inflation decreases purchasing power accurately reflects the economic reality.