Expected inflation rate
Definition
The expected inflation rate refers to the anticipated increase in the general price level of goods and services over a specific period. It is based on predictions made by economists and can impact various economic decisions.
Analogy
Think of the expected inflation rate as a weather forecast for prices. Just like you check the weather forecast to plan your activities, businesses and individuals use the expected inflation rate to make informed decisions about spending, saving, and investing.
Related terms
Actual inflation rate: The actual inflation rate is the real increase in prices that occurs over a given period. It is determined by measuring changes in consumer price indexes or other indicators.
Deflation: Deflation refers to a sustained decrease in the general price level of goods and services. It is the opposite of inflation.
Hyperinflation: Hyperinflation is an extremely high and typically accelerating inflation. It occurs when there is an excessive increase in money supply, leading to rapid erosion of purchasing power.
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