Inflation is defined as the rate at which the prices of goods and services increase in an economy over a period of time.
Also often called Price Inflation.
Inflation can be described as a decline in the real value of money.
Inflation is caused by money supply increasing faster than the growth rate of the economy.
Inflation - economists talk of the "real rate of interest" that is the nominal rate of interest minus the rate of inflation

The CPI os one measure of inflation calculated monthly.
The PPI is another measure.

Refers to a rise in some broad price index like the consumer price index (CPI) that indicates the overall level of prices.

Interest rates are often used by central banks as a tool for controlling inflation.

Real Interest

The real interest rate is the nimonal interest rate minus inflation.
Most banks and financial institutions quote interest on a nominal basis, compounded monthly.

Core Inflation

Removes the most volatile components, such as oil and the price of food from the wider price index
The price of oil and food can change quickly which can make it difficult to identify trends
For this reason a lot of statistical agencies remove oil and food from the index to give a better indication of "core inflation".

Headline Inflation

Measuring Inflation

CPI (Consumer Price Index) - The price of a selection of goods and services purchased by a typical consumer
RPI (Retail Price Index) - Also called the wholesale price index)
This index is a measure of year-on-year inflation, using a "basket" of goods and services including mortgage interest payments. This index is published monthly.
PPI (Producer Price Index -

UK Inflation

In the UK inflation is measured by the Retail Price Index (RPI)
This index is a measure of year-on-year inflation using a basket of goods and services including mortgage interest payments.
This index is published monthly.

US Inflation

In the US inflation is measured by the Consumer Price Index (CPI)

Asset Price Inflation

An abnormal increase in the price of stock (equity) and/or real estate can be asset price inflation.

Gross Domestic Product (GDP)

Is a measure in dollar value of the economy's total production of goods and services.


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