Inflation

Inflation is the rate at which the general level of prices for goods and services rises, leading to a decrease in purchasing power. This economic phenomenon is typically expressed as an annual percentage increase. As inflation increases, each unit of currency buys fewer goods and services, eroding the value of money. Inflation can be caused by various factors, including demand-pull inflation (when demand outstrips supply), cost-push inflation (when production costs rise, leading to higher prices), and built-in inflation (when businesses and workers anticipate rising prices and adjust wages and prices accordingly). Central banks often monitor inflation closely and may implement monetary policy measures, such as adjusting interest rates, to manage and control it, aiming for a stable economic environment. A moderate level of inflation is generally considered normal in a growing economy, but hyperinflation (extremely high and typically accelerating inflation) can lead to economic instability and hardship.