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Prices tend to go up when demand from consumers exceeds the normal capacity of producers to supply goods and services. An [[supply and demand|excess supply of goods and services]] tends to put downward pressure on prices.
Prices tend to go up when demand from consumers exceeds the normal capacity of producers to supply goods and services. An [[supply and demand|excess supply of goods and services]] tends to put downward pressure on prices.
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. Social Security payments are adjusted to inflation.
The common measure for consumers is the [[Consumer Price Index]] (CPI). Economists prefer a broader measure, the "inplicit GDP deflator", which includes the prices of non-consumer items like highways and factories.
In the U.S. the inflation rate was near zero in 2009.
[[File:Cpi.jpg|Thumb|400px|CPI (Consumer Price Index) change from previous year]]
==Hyperinflation==
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>
The worst episodes of hyperinflation historically have been in Germany after World War I, Hungary after World War II, and Zimbabwe in the late 2000s.
The worst episodes of hyperinflation historically have been in Germany in 1923 (after World War I), Hungary after World War II, and Zimbabwe in the late 2000s.
==Politics and inflation==
==Politics and inflation==
==External links==
==External links==
* [http://www.measuringworth.com/ppowerus/ "Purchasing Power of Money in the United States from 1774 to 2008"], translates the value of a dollar in one year to the value today or any year
* [http://www.measuringworth.com/ppowerus/ "Purchasing Power of Money in the United States from 1774 to 2008"], translates the value of a dollar in one year to the value today or any year
==See also==
====references====
<references/>
==see also==
==see also==