Inflation

Inflation is an economic indicator that defines the rise of prices and services in an economy over a certain period of time. 

When the level of prices rises the purchasing power of a national currency declines. 

For example, if you could buy a loaf of bread for $1 last year and today the same loaf of bread costs $1.50, this is what’s called inflation. 

Inflation is a normal occurrence when an economy is thriving; production and employment is stable and wages are increasing etc.. However if inflation is rising at a faster pace than the economy, this may cause problems where prices are too high for consumer consumption. 

Central banks play a major role in terms of controlling inflation in the economy by adjusting the country’s interest rate.