Inflation

Inflation is the measure of the increase in the price level of goods and services in an economy over a period of time. As inflation rises, each unit of currency buys fewer goods and services, which can erode the purchasing power of money. Inflation is influenced by factors such as the supply of money, demand for goods and services, and the cost of labor and materials. Central banks often aim to control inflation through monetary policy, and a moderate level of inflation is typically seen as a sign of a growing economy. However, high inflation can lead to economic instability, while deflation can signal an economic downturn.