Inflation
/ɪnˈfleɪʃn/noun
A general increase in prices and fall in the purchasing value of money.
The central bank has the power to combat inflation by raising interest rates
Often appears as...
- high inflation
- inflation rates
Usage tips
Academic
Definition 1 of 3
Pro Tip 1/3Economic Indicator
Inflation is often used as an economic indicator to gauge a country's economic health.
Reports show inflation is on the rise, indicating an overheating economy.
Pro Tip 2/3Not Always Negative
While inflation reduces purchasing power, moderate inflation is normal and can signal a growing economy.
The government aims for moderate inflation to encourage spending.
Pro Tip 3/3Central Bank Role
Central banks manage inflation by adjusting monetary policies such as interest rates.
To curb inflation, the central bank may hike interest rates.
Compare with
hyperinflation
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