A generalized, sustained trend of rising prices.
What is Inflation?
Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time. It is measured as the percentage change in a basket of goods and services that are typically consumed by households, such as food, housing, clothing, transportation, and medical care.
Inflation results from a combination of factors, including an increase in the demand for goods and services relative to the supply of those goods and services, an increase in the cost of production, and changes in monetary policy. When the demand for goods and services rises faster than the supply, prices will tend to increase. If the cost of production also rises, this can also contribute to inflation. And, when a central bank increases the money supply, this can lead to a decrease in the value of money and higher prices.
Inflation can have a significant impact on an economy and the standard of living of its citizens. A moderate rate of inflation can be good for an economy, as it can encourage growth and investment. However, high inflation can cause economic instability, reduce purchasing power, and erode the value of savings and investments.
It is important for central banks, governments, and individuals to monitor inflation and take actions to control it if necessary. For example, a central bank might raise interest rates to slow down the economy and reduce demand, while a government might take steps to increase the supply of goods and services in order to control inflation.
