4.1 Cost of living crisis

inflation

average yearly percentage increase in prices
**remember that this value will always be represented as a percentage

**inflation rate is positive

deflation

a decrease in the general price

**represented by a negative inflation rate

disinflation

rate of change in the general price level is positive but declining

*when prices are still rising but more slowly than before i.e. 1st year inflation rate is 6% and next year it’s 3%. in this case, prices are still rising but at a slower rate

deflation vs disinflation vs inflation

for deflation, prices fall
for disinflation, prices don’t fall but they stop increasing as quickly

prices are still increasing always

does inflation tend to be higher and more volatile in poor countries or rich countries

inflation is higher and more volatile in poor countries