Inflation is the general increase in the price of goods and services in an economy over a period of time. This means that the purchasing power of currency decreases, as it requires more dollars to buy the same amount of goods or services than it did before. Inflation can occur due to various reasons such as an increase in the supply of money, high demand for goods and services, or a decrease in the supply of goods and services. Inflation is measured by a percentage increase in the Consumer Price Index (CPI) and can have significant impacts on the economy, including reduced purchasing power and investment returns, and increased interest rates and unemployment.
Inflation is the rate at which the general level of prices for goods and services is rising and, subsequently, purchasing power is falling. It is commonly measured by the Consumer Price Index (CPI) or the Producer Price Index (PPI). Inflation can be caused by various factors, such as an increase in the money supply, higher production costs, or increased consumer demand. There are different types of inflation, including demand-pull inflation, cost-push inflation, and built-in inflation. Inflation impacts various aspects of the economy, including wages, interest rates, consumer spending, investment, and the overall standard of living. Central banks, such as the Federal Reserve in the United States, use monetary policy tools to control and manage inflation.
