Price Indices And Inflation

Price Index

A ratio showing the extent of price change over a period by comparing current prices with a base year.

Market Basket

A fixed list of items used to track inflation in an economy or specific market.

Consumer Price Index (CPI)

Examines the weighted average of prices of consumer goods and services, collected monthly from urban areas.

Producer Price Index (PPI)

Measures changes in the prices of goods and services purchased by producers, usually containing raw commodities.

Cost of Living

Changes in CPI help measure changes in the cost of living, important for benefits like Social Security indexed to CPI.

Unemployment

The number of people actively looking for work but not currently employed.

Inflation

A rise in the overall price level, leading to economic instability.

Nominal GDP

The total value of goods and services at current prices, without adjusting for inflation.

Real GDP

The total value of goods and services adjusted for inflation, providing a more accurate measure of economic output.

Hyperinflation

A very high rate of accelerating inflation eroding the value of currency, leading to rapid increase in all goods' prices.

Stagflation

A period of slow economic growth with relatively high inflation, causing economic stagnation.

Nominal Interest Rate

The interest rate appearing on loan or savings documentation.

Real Interest Rate

The nominal interest rate minus the rate of inflation, providing a more accurate measure of interest.