Economic Development Indices Questions Medium
The inflation rate refers to the percentage increase in the general price level of goods and services in an economy over a specific period of time, typically measured on an annual basis. It is a key indicator used to assess the rate at which the purchasing power of a currency is eroding. Inflation can be caused by various factors such as increased demand, supply shortages, changes in production costs, or changes in government policies. Central banks and policymakers closely monitor inflation rates as it has significant implications for economic stability and monetary policy decisions. High inflation can erode the value of money, reduce consumer purchasing power, and create uncertainty in the economy, while low inflation or deflation can hinder economic growth and investment.