Assume that at some point in your life, you will maintain several bank accounts including a checking account and a money market account. You might pay a fee of $100 each year for your bank to sweep funds to and from your checking account depending on the balances. At the same time, you might have a job that provides for an increase in your salary based on changes in the rate of inflation. In this situation does a loss in purchasing power represent a cost of inflation? Why or why not? Do your banking fees represent a cost of inflation? Why or why not?
Inflation is a fall in the real value of your currency. Your money buy less. Decline in purchasing power. Bank fees are something different. The bank fees that you pay are something you have contractually agreed to with your bank. It doesn't matter where the value of your currency goes, your bank fees are the same.
