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.
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