Relative Inflation

Definition

Relative inflation refers to the difference in the rate of price increases between different goods and services within an economy. It compares the changes in prices of specific items to the overall inflation rate.

Analogy

Imagine you're at a grocery store, and you notice that while some products have become more expensive, others have remained relatively stable in price. This difference in price changes is similar to relative inflation - it's about how certain items experience different rates of price increase compared to others.

Related terms

Deflation: Deflation is a decrease in the general level of prices within an economy over time.

Consumer Price Index (CPI): The CPI is a measure that tracks changes in the average prices paid by consumers for a basket of goods and services over time.

Hyperinflation: Hyperinflation refers to extremely high and typically accelerating inflation, often leading to a breakdown in the functioning of an economy.