Inflation

T2 CC5 (keywords)

Anticipated Inflation

Inflation that economic actors can predict and plan for.

Base Year

A reference year in which the price index is set to 100 for comparison in future calculations.

Consumer Price Index (CPI)

A measure of the price level used across the European Union and by the Bank of England to assess inflation.

CPIH

A version of CPI that includes owner-occupier housing costs and council tax.

Cost-Push Inflation

Inflation resulting from increased costs of production, such as higher wages or raw material prices.

Deflation

A sustained general fall in prices (or the average price level) across an economy.

Demand-Pull Inflation

Inflation caused by excess demand in the economy, leading to higher prices.

Disinflation

A fall in the rate of inflation, meaning prices are still rising but at a slower pace.

Growth of Money Supply

A cause of inflation where the money supply grows faster than the real output, increasing demand and pushing up prices.

Hyperinflation

Extremely high and typically accelerating inflation, often leading to the collapse of a currency’s value.

Indexation

Adjusting wages, pensions, or interest rates in line with inflation to maintain purchasing power.

Inflation

sustained general rise in prices (or the average price level) across an economy.

Interest Rates

The cost of borrowing money, often adjusted by the Bank of England to control inflation.

Monetarist Theory of Inflation

The theory that inflation is always caused by excessive growth in the money supply.

Price Index

A statistical measure used to track the changes in the price level of goods and services over time.

Real Wages

Wages adjusted for inflation, reflecting the actual purchasing power of earnings.

Retail Prices Index (RPI)

A measure of the price level used in the UK for over 60 years, often used for indexing benefits and train fares.

Stagflation

A situation where inflation is high but economic growth is slow or stagnant, often leading to higher unemployment.

Unanticipated Inflation

Inflation that is unexpected, making planning and decision-making more difficult for consumers and firms.

Weighted Basket of Goods

The collection of consumer goods and services used to calculate inflation, with each item weighted based on typical spending patterns.