Inflation is increasing, inflation is falling. Inflation rates are too high, inflation rates are too low.
We hear it a lot but what does it mean?
Inflation is an important aspect of the economy and consequently crucial to our understanding of the financial world and how it affects us.
The basics are quite straightforward. In a nutshell inflation is the rise in the price of the things we buy, be it goods or services. As the price goes up a certain amount of money can buy less.
One of the most important issues within economics, inflation is chiefly measured by the inflation rate, which is calculated by the annual percentage change in a price indexes, most notably the Consumer Prices Index (CPI) and the Retail Prices Index (RPI).