Definition
Inflation is the sustained increase in the general price level of goods and services in an economy over a period of time, generally measured by the Consumer Price Index (CPI) or the Producer Price Index (PPI), leading to the decrease in the purchasing power of money.
Pronunciation
US English
UK English
Part of Speech
Noun
Synonyms
price increase, escalation, rise, surge, upswing, appreciation, devaluation, swelling, expansion.
Antonyms
deflation, decrease, reduction, contraction, abatement, downturn, depreciation, reduction.
Word Forms
| Part of Speech | Words |
|---|---|
| Noun | inflators, inflations, inflator, inflater, inflation, inflaters |
| Verb | inflated, inflates, inflate, inflating |
| Adjective | inflationary, inflatable |
| Adverb | None |
Example Sentences
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The government is trying to control inflation by implementing fiscal and monetary policies.
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My salary increase was barely enough to keep up with the inflation rate and rising cost of living.
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The local supermarket had to raise its prices due to the inflation of food costs.
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Inflation had a negative impact on the purchasing power of my savings, making it more difficult for me to afford the things I needed.
Usage
The word ‘inflation’ is generally used as a noun to describe a sustained increase in the general price level of goods and services that occurs over time. It is an economic concept that is measured by various indexes such as the Consumer Price Index (CPI) or the Producer Price Index (PPI). Inflation can be caused by various factors such as an increase in the money supply, a decrease in the supply of goods and services, or an increase in demand.
The word ‘inflation’ is derived from the Latin word ‘inflatio’ meaning ‘a blowing up’. The prefix ‘in-’ means ’not’ or ‘opposite’ while the suffix ‘-tion’ indicates a state or condition. The word ‘inflate’ is the verb form of inflation and means to cause something to expand or increase, particularly prices.
There are various other related terms used in economics such as ‘deflation’ which is the opposite of inflation and means a decrease in the general price level of goods and services. Another related term is ‘hyperinflation’ which refers to an extremely high rate of inflation, usually greater than 50% per month, causing prices to increase rapidly and leading to the devaluation of a nation’s currency.
The impact of inflation can be significant in terms of its effect on the purchasing power of consumers, businesses, and investors. The rise in prices of goods and services can lead to a decrease in the standard of living of individuals and also reduce the profitability of businesses. High rates of inflation can also lead to hyperinflation, a sharp decline in the value of a currency, and ultimately economic instability.
Therefore, it is essential for governments and central banks to implement monetary and fiscal policies to control inflation and maintain price stability in an economy. This can be done by regulating the money supply, controlling interest rates, and implementing government policies such as wage and price controls.