What is Inflation?

Inflation refers to sudden increase in price of goods and services. Sustained increase in the general price level, often measured by an index of consumer prices. The rate of inflation is the percentage change in the price level in a given period.

In very simple terms inflation is when buying entities in the economy (people, companies, the state, etc.) have more money than the actual value of all items (articles, services, etc.) together.

They will then have a tendency to pay more than the present “price” (value) thus rising prices above actual value without increasing the amount of items offered.

Inflation is expressed as a percent =((Price level of current period - price level of previous period) x 100)/ Price level of previous period