When inflation kicks in, here's what actually happens on the ground: purchasing power gets squeezed hard. People walk into stores, see prices climbing, and suddenly they're doing the math differently. That $50 used to get you a full grocery run? Now it barely covers half. So consumption naturally pulls back. It's not rocket science—higher prices mean fewer purchases, tighter wallets, slower spending velocity. This domino effect ripples through the economy fast. Understanding these cycles matters if you're watching markets, because consumer spending drives everything downstream, from corporate earnings to asset valuations.