Inflation
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Beginner Level
Global
Macroeconomics
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Definition
The rate at which the general level of prices for goods and services is rising, eroding purchasing power.
Detailed Explanation
Inflation is measured by Consumer Price Index (CPI) or Wholesale Price Index (WPI). Moderate inflation is normal in a growing economy, but hyperinflation or deflation can be harmful. Central banks use monetary policy to control inflation.
Example
If inflation is 5% annually, an item costing ₹100 today will cost ₹105 next year.