Inflation Definition

Inflation is a persistent increase in the general price level of goods and services in an economy over a period of time. When the 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 in the economy. A chief measure of inflation, the annual inflation rate of the change in a general price index, usually the consumer price index, over time. The opposite of inflation is deflation.