Changes

In economics, '''inflation''' is a general rise in the price of goods and services in relation to purchasing power.

In economics, '''inflation''' is a general rise in the price of goods and services in relation to purchasing power.

The most widely used measure of inflation is the [[consumer price index]] (CPI). It reflects changes in the price of a representative "basket" of goods and services sold: food, housing, transportation, furniture, clothing, recreation, and other items.

The most widely used measure of inflation is the [[consumer price index]] (CPI). It reflects changes in the price of a representative "basket" of goods and services sold:

 

* food

* housing

* transportation

* furniture

* clothing

* recreation

* other items

The inflation rate is expressed as a percentage increase in average prices over a year. For example, if the cost of the CPI "basket" rises from $100 one year ago to $102 today, the current inflation rate is 2 per cent. When the CPI rises, the purchasing power of the average consumer's dollar falls.<ref>

The inflation rate is expressed as a percentage increase in average prices over a year. For example, if the cost of the CPI "basket" rises from $100 one year ago to $102 today, the current inflation rate is 2 per cent. When the CPI rises, the purchasing power of the average consumer's dollar falls.<ref>

High inflation undermines the economy's ability to generate long-lasting growth and job creation. Consumers and investors may put off purchases because of uncertainty. High inflation erodes the value of incomes and savings. People on fixed incomes, including the elderly and poor are particularly vulnerable to inflation.   

High inflation undermines the economy's ability to generate long-lasting growth and job creation. Consumers and investors may put off purchases because of uncertainty. High inflation erodes the value of incomes and savings. People on fixed incomes, including the elderly and poor are particularly vulnerable to inflation.   

Hyperinflation is out of control inflation and has occurred when there is a massive imbalance between the supply and demand and a complete loss of confidence in the currency.  It has occurred when prices are decontrolled by central governments, like in the collapse of the USSR, where inflation reached  over 1000% in some areas.  <ref>[http://globalis.gvu.unu.edu/indicator.cfm?IndicatorID=152&Year=1995&Country=UA] Inflation Indicators Ukraine</Ref>   

Hyperinflation is out of control inflation and has occurred when there is a massive imbalance between the supply and demand and a complete loss of confidence in the currency.  It has occurred when prices are decontrolled by central governments, like in the collapse of the [[USSR]], where inflation reached  over 1000% in some areas.  <ref>[http://globalis.gvu.unu.edu/indicator.cfm?IndicatorID=152&Year=1995&Country=UA] Inflation Indicators Ukraine</Ref>   

==References==

==References==