Inflation is an indicator of the value of money. It is the gradual loss of a currency's purchasing value over time.
- Inflation is determined by the rate at which the prices of goods and services fluctuate over time.
- Consumer spending drops when inflation rises because people can no longer afford to purchase quite so much.
- Inflation is distinguished from deflation, which happens when money's purchasing power rises while prices are falling.
- This loss of currency value has influenced the general cost of living for the ordinary public, resulting in a slowdown in economic growth.
- Economists agree that sustained inflation happens when a country's money supply grows faster than its economic growth.
- This can help exporters by making their products more affordable when valued in foreign currencies.
- On the other side, this might affect importers by raising the cost of foreign-made commodities.
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