Prices go up a little every year. The note in your drawer still says €1,000, but with prices up 3% it buys what about €970 bought a year ago.
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When energy, wages and other costs rise, shops raise prices. The euro area’s central bank aims for about 2% a year: a little, on purpose.
At 3% a year for 10 years, €1,000 buys what €744 buys today. Nothing was spent and nothing was stolen: a quarter just went quiet.
The number in your account never goes down, so cash feels safe. The loss never shows in the app. It shows at the till.
In October 2022 prices in the euro area were 10.6% higher than a year before (Eurostat). €1,000 kept in a drawer lost about a tenth of what it could buy, in one year.
Cash that doesn’t grow loses what it can buy: at 3% a year, a quarter in 10 years.
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