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Inflation

An increase in average prices of goods and services in an economy that reduces consumers' purchasing power.

Inflation rate

The percentage increase in a price index over time, such as the Consumer Price Index (CPI).

Deflation

A decrease in the average prices of goods and services in an economy over time, often associated with weak economic conditions.

Disinflation

A decrease in the rate of inflation, indicating that prices are rising at a slower rate.

Hyperinflation

An uncontrollable inflationary spiral, often resulting in extreme price increases.

Stagflation

A situation where prices rise in a slowing economy with increasing unemployment rates.

Asset price inflation

An increase in the prices of assets that may not reflect a general rise in prices.

Dual mandate

The two goals of policy by the central bank: price stability and full employment output.

Demand-pull inflation

When prices rise due to excessive demand creating a shortage.

Cost-push inflation

When prices rise because of increasing production costs.

Negative supply shock

A situation where insufficient supply leads to higher prices.

Inflation Expectations

When prices rise due to the expectation of future price increases causing immediate demand.

Contractionary policy

A fiscal or monetary policy aimed at reducing inflation by restricting money supply and consumer spending.

Wage-price spiral

The cycle where rising prices lead to higher wages and vice versa.

Consumer Price Index (CPI)

A measure of price variation of a market basket of goods and services purchased by a typical urban consumer.

Producers Price Index (PPI)

A measure of price variations of products sold by domestic producers.

GDP Deflator

A measure that looks at price variations based on nominal GDP and real GDP.

Expenditures Price Index

A measure of price variations of items bought by domestic consumers.

Expansionary fiscal policy

A policy implemented during a recession by increasing government spending or reducing taxes to stimulate demand.