Inflation
Co-Founder•1 min read
Inflation is the rate at which prices for goods and services rise over time, leading to a decrease in the purchasing power of money.
It’s usually measured as an annual percentage change in a country’s Consumer Price Index (CPI) or similar benchmark. Moderate inflation is normal in a growing economy, but high or unpredictable inflation can erode savings, squeeze margins, and increase borrowing costs.
Example:
If inflation is 4%, something that cost £100 last year will cost £104 this year on average.
Used in:
Economic policy, interest rate setting, business forecasting, and wage or price indexation.