Inflation

Definition

Inflation is the sustained increase in the general price level of goods and services in an economy over time, resulting in a decline in purchasing power. It is typically measured by consumer price indices (CPI) and is influenced by monetary policy, supply shocks, demand pressures, and expectations. Moderate inflation is considered normal in growing economies, but hyperinflation can destabilize governments and erode social contracts. Central banks use interest rates and monetary tools to target inflation within desired ranges. Geopolitically, inflation in key commodity-producing nations or major economies can have cascading effects on global trade patterns and political stability.