Inflation

• Inflation

  Rate of increase in general price level in an economy
• Deflation

  Rate of decrease in the general price level in the economy (negative inflation)
• Disinflation


  Fall in the rate of inflation
• Price level

  The average of current prices across the entire spectrum of goods and services produced in an economy
• Consumer Price Index (CPI)

  A measure of the general level of prices in the UK, the rate of change which has been used as the government’s inflation target since January 2004
• Base year

  Useful comparison between price levels in different time periods (base usually 100)
• Retail Price Index (RPI)

  Measure of the average prices in the UK (includes house payments)
• Demand-pull inflation

  Inflation initiated by an increase in aggregate demand
• Cost-push inflation

  Inflation initiated by an increase in the costs faced by firms, arising on the supply side