Podcast 6: Inflation

Inflation is an increase in the general level of prices in the economy; a decline in the level of prices is deflation. The primary measure of inflation is the Consumer Price Index. It compares the prices of a ” market basket” of consumer goods in a particular year to the prices for that market basket in a base period, to produce a price index. The rate of inflation from one year to the next is equal to the percentage change in the CPI between the current year and the preceding year.