Glossary of Terms. Inflation
| Date: November 29, 2008 | Source: Economic @ 21 |
| Category: ECONO-CONCEPTS | |
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Loading ... In economics , inflation is sustained and widespread increase in the price level of goods and services, measured against purchasing power. Is also defined as the decline in market value or purchasing power of a currency in a particular economy, which differs from the devaluation , since the latter refers to the fall in the value of the currency of a country in relation to another currency traded in international markets like the U.S. dollar, euro or yen.
The existence of inflation over a period implies a steady increase in the price of goods in general. To measure the increase, creating different indexes that measure the average growth percentage of a weighted basket of goods based on what is measured.
The most widely used index to measure inflation is the "Consumer Price Index" or CPI , which indicates the percentage change in the average price of goods and services purchased by a typical consumer in two instants of time, using as reference called in some countries the basic basket.
Other indices such as the "wholesale price index" (IPM) and the "producer price index," which differ from the CPI that do not include duties and taxes, or profit made by wholesalers and producers. These indices are used to make specific measurements on the behavior of the economy of a country, but not used as official inflation rates.
