inflation (redirected from Inflation (economics))

Inflation

The rate at which the general level of prices for goods and services is rising.

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inflation

A general increase in the price level of goods and services. Unexpected inflation tends to be detrimental to security prices, primarily because it forces interest rates higher. A point to keep in mind is that a certain amount of inflation is already embodied in security prices. Compare deflation. See also consumer price index, core inflation, cost-push inflation, demand-pull inflation, GDP deflator, producer price index, purchasing power risk.

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Inflation. Inflation is a persistent increase in prices, often triggered when demand for goods is greater than the available supply or when unemployment is low and workers can command higher salaries.

Moderate inflation typically accompanies economic growth. But the US Federal Reserve Bank and central banks in other nations try to keep inflation in check by decreasing the money supply, making it more difficult to borrow and thus slowing expansion.

Hyperinflation, when prices rise by 100% or more annually, can destroy economic, and sometimes political, stability by driving the price of necessities higher than people can afford.

Deflation, in contrast, is a widespread decline in prices that also has the potential to undermine the economy by stifling production and increasing unemployment.

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inflation

A loss in the purchasing power of money. Inflation is generally measured by the consumer price index.

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Inflation

What Does Inflation Mean?

The rate at which the general level of prices for goods and services rises and, subsequently, purchasing power falls; investors can track the direction of inflation by monitoring the Consumer Price Index (CPI).

Investopedia explains Inflation

As inflation rises, every dollar will buy a smaller percentage of a good. For example, if the inflation rate is 2%, a $1 pack of gum will cost $1.02 in a year. Most countries' central banks try to sustain an inflation rate of 2 to 3%.

Related Terms:
• Consumer Price Index—CPI
• Deflation
• Hyperinflation
• Stagflation
• Treasury Inflation Protected Securities (TIPS)