inflation

A general increase in prices.

Inflation

The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

Investopedia Commentary

As inflation rises, every dollar will buy a smaller percentage of a good. For example, if the inflation rate is 2%, then a $1 pack of gum will cost $1.02 in a year.

Most countries' central banks will try to sustain an inflation rate of between 2-3%.

Related Links

Curbing The Effects Of Inflation
All about Inflation Tutorial
The Forgotten Problem Of Inflation
Why the CPI Is a Friend to Investors

See also: CPI, Deflation, Disinflation, Fed, Hyperinflation, Inflation-Indexed Security, Inflationary Psychology, PPI, Reflation, RPI, Stagflation, Stagnation, Treasury Inflation Protected Securities (TIPS)

Also spelled: Infation

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.

inflation in·fla·tion (ĭn-flā'shən)
n.

1. Distention with a fluid or gas.

2. The act of distending an organ or body part with a fluid or gas.