When it comes to inflation, I simply know that it is an increase in prices that results in a fall of the currency's value. I'd like to apply this to wages in a workplace that has not provided a pay rise for a few years, and to understand any associated formulas.
For example, assume a monthly salary of 10 000 in some currency, with an annual inflation rate of 5%. Now if the pay rise is nil, that would effectively be considered a pay cut, as far as currency value is concerned, correct? Would it also be a correct assumption that any raise between 0% to 5% in this case would still be considered a pay cut, as the pay rise would need to be greater than the inflation rate to have any real value?
How would one calculate the loss in value over multiple years?