Inflation

inflation rateprice inflationfood inflationinflateinflatedinflation ratesinflationary expectationseconomic inflationinflatinginflationary pressures
In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.wikipedia
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Economics

economiceconomisteconomic theory
In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.
Macroeconomics analyzes the entire economy (meaning aggregated production, consumption, saving, and investment) and issues affecting it, including unemployment of resources (labour, capital, and land), inflation, economic growth, and the public policies that address these issues (monetary, fiscal, and other policies).

Deflation

deflationarydeflationary spiralmoney supply contracted
The opposite of inflation is deflation, a sustained decrease in the general price level of goods and services. Other economic concepts related to inflation include: deflation – a fall in the general price level; disinflation – a decrease in the rate of inflation; hyperinflation – an out-of-control inflationary spiral; stagflation – a combination of inflation, slow economic growth and high unemployment; reflation – an attempt to raise the general level of prices to counteract deflationary pressures; and asset price inflation – a general rise in the prices of financial assets without a corresponding increase in the prices of goods or services.
Deflation occurs when the inflation rate falls below 0% (a negative inflation rate).

Hyperinflation

hyper-inflationinflationgalloping inflation
Economists generally believe that very high rates of inflation and hyperinflation are caused by an excessive growth of the money supply. Other economic concepts related to inflation include: deflation – a fall in the general price level; disinflation – a decrease in the rate of inflation; hyperinflation – an out-of-control inflationary spiral; stagflation – a combination of inflation, slow economic growth and high unemployment; reflation – an attempt to raise the general level of prices to counteract deflationary pressures; and asset price inflation – a general rise in the prices of financial assets without a corresponding increase in the prices of goods or services.
In economics, hyperinflation is very high and typically accelerating inflation.

Real versus nominal value (economics)

inflation-adjustednominal valuenominal
When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy.
A real value is one which has been adjusted for inflation, enabling comparison of quantities as if the prices of goods had not changed on average.

Money supply

supply of moneyM2M1
Economists generally believe that very high rates of inflation and hyperinflation are caused by an excessive growth of the money supply.
Public and private sector analysts monitor changes in the money supply because of the belief that such changes affect the price level of securities, inflation, the exchange rates and the business cycle.

Central bank

central bankscentral bankingcentral banking system
Generally, these monetary authorities are the central banks that control monetary policy through the setting of interest rates, through open market operations, and through the setting of banking reserve requirements.
Inflation is defined either as the devaluation of a currency or equivalently the rise of prices relative to a currency.

Price revolution

inflationafter the Spanish conquestsdiscovery of the precious metals in America
From the second half of the 15th century to the first half of the 17th, Western Europe experienced a major inflationary cycle referred to as the "price revolution", with prices on average rising perhaps sixfold over 150 years.
The Price Revolution, sometimes known as the Spanish Price Revolution, was a series of economic events that occurred between the second half of the 15th century and the first half of the 17th century, and most specifically linked to the high rate of inflation that occurred during this period across Western Europe.

Purchasing power

buying powerby the ability to paycurrent purchasing power
When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy.
Inflation does not always imply falling purchasing power of one's money income since the latter may rise faster than the price level.

Interest rate

interest ratesdiscount rateinterest
Generally, these monetary authorities are the central banks that control monetary policy through the setting of interest rates, through open market operations, and through the setting of banking reserve requirements.
Interest rate targets are a vital tool of monetary policy and are taken into account when dealing with variables like investment, inflation, and unemployment.

Ming dynasty

MingMing ChinaMing Empire
Fearing the inflation that plagued the Yuan dynasty, the Ming Dynasty initially rejected the use of paper money, and reverted to using copper coins.
Explanations for the demise of the Yuan include institutionalized ethnic discrimination against Han Chinese that stirred resentment and rebellion, overtaxation of areas hard-hit by inflation, and massive flooding of the Yellow River as a result of the abandonment of irrigation projects.

Stagflation

high unemployment and inflationeconomic downturnglobal inflation
Other economic concepts related to inflation include: deflation – a fall in the general price level; disinflation – a decrease in the rate of inflation; hyperinflation – an out-of-control inflationary spiral; stagflation – a combination of inflation, slow economic growth and high unemployment; reflation – an attempt to raise the general level of prices to counteract deflationary pressures; and asset price inflation – a general rise in the prices of financial assets without a corresponding increase in the prices of goods or services.
In economics, stagflation, or recession-inflation, is a situation in which the inflation rate is high, the economic growth rate slows, and unemployment remains steadily high.

Venezuela

VenezuelanBolivarian Republic of VenezuelaVEN
Currently, the hyperinflation in Venezuela is the highest in the world, with an annual inflation rate of 833,997% as of October 2018.
Inflation peaked at 100% in 1996 and poverty rates rose to 66% in 1995 as (by 1998) per capita GDP fell to the same level as 1963, down a third from its 1978 peak.

Disinflation

decreaseddisinflationary scenarioinflation decline
Other economic concepts related to inflation include: deflation – a fall in the general price level; disinflation – a decrease in the rate of inflation; hyperinflation – an out-of-control inflationary spiral; stagflation – a combination of inflation, slow economic growth and high unemployment; reflation – an attempt to raise the general level of prices to counteract deflationary pressures; and asset price inflation – a general rise in the prices of financial assets without a corresponding increase in the prices of goods or services.
Disinflation is a decrease in the rate of inflation – a slowdown in the rate of increase of the general price level of goods and services in a nation's gross domestic product over time.

Monetary inflation

inflationinflation riskmonetary growth
This relationship between the over-supply of banknotes and a resulting depreciation in their value was noted by earlier classical economists such as David Hume and David Ricardo, who would go on to examine and debate what effect a currency devaluation (later termed monetary inflation) has on the price of goods (later termed price inflation, and eventually just inflation).
Depending on many factors, especially public expectations, the fundamental state and development of the economy, and the transmission mechanism, it is likely to result in price inflation, which is usually just called "inflation", which is a rise in the general level of prices of goods and services.

Real wages

real wagewage inflationreal average wages
In addition, higher expected inflation tends to be built into the rate of wage increases, giving a smaller effect if any on the changes in real wages.
Real wages are wages adjusted for inflation, or, equivalently, wages in terms of the amount of goods and services that can be bought.

Monetary policy

monetarymonetary policiesexpansionary monetary policy
Positive effects include reducing unemployment due to nominal wage rigidity, allowing the central bank more leeway in carrying out monetary policy, encouraging loans and investment instead of money hoarding, and avoiding the inefficiencies associated with deflation.
Monetary policy is the policy adopted by the monetary authority of a country that controls either the interest rate payable on very short-term borrowing or the money supply, often targeting inflation or the interest rate to ensure price stability and general trust in the currency.

Real interest rate

negative real interest ratesrealinterest rate
They are more or less built into nominal interest rates, so that a rise (or fall) in the expected inflation rate will typically result in a rise (or fall) in nominal interest rates, giving a smaller effect if any on real interest rates.
It can be described more formally by the Fisher equation, which states that the real interest rate is approximately the nominal interest rate minus the inflation rate.

Devaluation

devalueddevaluecurrency devaluation
At that time, the term inflation referred to the devaluation of the currency, and not to a rise in the price of goods.
Related but distinct concepts include inflation, which is a market-determined decline in the value of the currency in terms of goods and services (related to its purchasing power).

Consumer price index

CPIconsumer pricesconsumer price inflation
The common measure of inflation is the inflation rate, the annualized percentage change in a general price index, usually the consumer price index, over time.
The annual percentage change in a CPI is used as a measure of inflation.

Adaptive expectations

adaptive expectations modelexpectationsinflationary expectations
Adaptive expectations models them as a weighted average of what was expected one period earlier and the actual rate of inflation that most recently occurred.
One simple version of adaptive expectations is stated in the following equation, where p^e is the next year's rate of inflation that is currently expected; p^e_{-1}is this year's rate of inflation that was expected last year; and p is this year's actual rate of inflation:

Core inflation

Core inflation is a measure of inflation for a subset of consumer prices that excludes food and energy prices, which rise and fall more than other prices in the short term.
In measuring long run inflation, transitory price changes should be excluded.

Price level

general price levelaggregate price levelprice levels
In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.
For example, the inflation rate could be measured as

Labour economics

laborlabor economicslabor market
However, "inflation" may also be used to describe a rising price level within a narrower set of assets, goods or services within the economy, such as commodities (including food, fuel, metals), tangible assets (such as real estate), financial assets (such as stocks, bonds), services (such as entertainment and health care), or labor.

Hyperinflation in the Weimar Republic

hyperinflationinflation in the Weimar Republic1920s German inflation
The hyperinflation in the Weimar Republic of Germany is a notable example.
Since reparations were required to be repaid in hard currency, not the rapidly depreciating paper mark, one strategy that Germany used was the mass printing of bank notes to buy foreign currency, which was then used to pay reparations, greatly exacerbating the inflation of the paper mark.

Nominal interest rate

Nominal annual interestnominal annual interest ratenominal interest rates
They are more or less built into nominal interest rates, so that a rise (or fall) in the expected inflation rate will typically result in a rise (or fall) in nominal interest rates, giving a smaller effect if any on real interest rates.