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Inflation Rate |
Also found in: Wikipedia | 0.04 sec. |
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Inflation Rate A measure of how fast a currency loses its value. That is, the inflation rate measures how fast prices for goods and services rise over time, or how much less one unit of currency buys now compared to one unit of currency at a given time in the past. The inflation rate may increase due to massive printing of money, which increases supply in the economy and thus reduces demand. Equally, it may occur because certain important commodities become rarer and thus more expensive. Central banks attempt to control the inflation rate by increasing and decreasing the money supply. The inflation rate is important to fixed-income securities, as the returns on these securities may not keep up with inflation, and thus result in a net loss for the investor. See also: CPI, Deflation. Inflation rate. The inflation rate is a measure of changing prices, typically calculated on a month-to-month and year-to-year basis and expressed as a percentage. For example, each month the Bureau of Labor Statistics calculates the inflation rate that affects average urban US consumers, based on the prices for about 80,000 widely used goods and services. That figure is reported as the Consumer Price Index (CPI). How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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With the recent increase in the Bank rate to counter smoldering inflation, it pays to remember that since the 1990s, Canada has enjoyed low inflation rates under the leadership of the Bank of Canada. The different hypotheses on the link between inflation and inflation uncertainty have given rise to a large empirical literature, mainly with respect to the experience of the G7 advanced economics, where average inflation rates typically have been low (with the exception of a brief period in the late 1970s and early 1980s). Countries like Italy, Greece, and Portugal--which never experienced such low inflation rates over an extended period of time in their modern history and which enjoyed huge windfall profits when their interest rates dropped close to the German level at entry into European Monetary Union--have squandered these benefits. |
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