Inflation

Article

Inflation is a sustained increase in the general price level of goods and services in an economy. As prices rise, each unit of currency buys fewer goods and services, so the purchasing power of money falls.

Inflation is commonly measured with price indexes such as the consumer price index, which tracks changes in the cost of a representative basket of goods and services. Different indexes may cover consumers, producers, imports, exports, wages, or the broader economy.

Moderate inflation can arise when demand grows faster than productive capacity, when production costs rise, when money and credit expand, or when expectations influence wages and prices. Temporary changes in individual prices are not necessarily inflation unless the increase becomes broad and persistent.

High or unpredictable inflation can distort saving, investment, contracts, interest rates, taxation, and income distribution. Central banks usually aim to keep inflation low and stable through monetary policy, while governments may also influence it through fiscal, regulatory, and supply-side measures.

Source details and credits

• Source / publisher: Wikipedia
• URL type: WWW
• Credits: Wikipedia
• URL: https://en.wikipedia.org/wiki/Inflation