Inflation & the CPI

Inflation is a sustained rise in the general price level, which erodes the purchasing power of money. It's usually tracked with the Consumer Price Index, a basket of typical household goods.

• Demand-pull inflation comes from too much spending; cost-push from rising input costs.
• Moderate, stable inflation (around 2%) is generally seen as healthy.
• Deflation — falling prices — can be as damaging as high inflation.