What is the role of inflation in savings calculations?

"Inflation is a crucial factor to consider in savings calculations. It refers to the gradual increase in the prices of goods and services over time. This means that the purchasing power of your money decreases as prices rise.   
Here is why inflation matters:

• Reduction in Savings: If your savings are not growing at a rate that outpaces inflation, your money becomes less valuable over time. For example, if inflation is 3% and your savings are earning 2%, your savings are losing purchasing power.   
• Impacts Future Goals: When planning for future expenses like retirement or a child's education, you need to consider how inflation will affect costs. A certain amount of money may seem sufficient today, but it might not cover those expenses in the future due to rising prices.   
• Requires Adjusted Savings: To balance inflation, you need to save more aggressively or invest in assets that have the potential to earn returns higher than the inflation rate. This helps ensure that your savings can keep pace with rising prices.