Written by the Fiveable Content Team • Last updated September 2025
Verified for the 2026 exam
Verified for the 2026 exam•Written by the Fiveable Content Team • Last updated September 2025
Definition
Inflation refers to the general increase in prices of goods and services over time, resulting in a decrease in the purchasing power of money.
Related terms
Deflation: Deflation is the opposite of inflation. It refers to a decrease in prices over time, resulting in an increase in the purchasing power of money.
Consumer Price Index (CPI): CPI measures changes in the average price level of goods and services purchased by households. It helps track inflation rates.
Hyperinflation: Hyperinflation is an extremely high and typically accelerating inflation. It occurs when prices rise rapidly, causing people to lose confidence in their currency.