Inflation

An increase in the prices of a "basket" of goods and services over time. As price levels rise, each unit of currency buys fewer goods and services, consequently, inflation is also an erosion in the purchasing power of money. Inflation can be "demand-pull", resulting from excess demand increasing prices; "cost-push" resulting from higher material and labour costs or from excessive government spending and/or borrowing. The chief measure of inflation is the inflation rate, the annualized percentage change in the Consumer Price Index over time.