How does inflation typically affect consumers' purchasing power when nominal income does not increase at the same rate as prices?

• A. It decreases purchasing power because the same amount of money buys fewer goods and services.
• B. It increases purchasing power because higher prices raise the real value of money.
• C. It has no effect on purchasing power because inflation only changes nominal variables, not real ones.
• D. It decreases purchasing power only if the CPI is falling, not when it is rising.

Answer: (A)