Inflation

Definition

Inflation is the rate at which the general level of prices for goods and services is rising, leading to a decrease in the purchasing power of money. It occurs when demand outpaces supply or when production costs increase.

Related terms

Purchasing Power: The amount of goods and services that can be bought with a unit of currency; it decreases as inflation rises.

Consumer Price Index (CPI): A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, often used to assess inflation.

Hyperinflation: An extremely high and typically accelerating inflation rate, often causing rapid erosion of a country's currency's true value