Inflation

INFLATION

Inflation is one of the problems in economy. Inflation frequently associated with increasing in price of goods and services by the particular time period.  

Inflation is an increase in the price of goods and services that is representative of the economy as a whole. For example; all price of the goods and services increase in Malaysia at 1997 at one time period.

“inflation means that your money won’t buy as much today as you could  yesterday. ”

“the higher price level, the lower real value (purchasing power) of money.”

3.1      Inflation rates

Inflation is usually estimated by calculating the inflation rate of a price index, usually the Consumer Price Index. The Consumer Price Index measures prices of a selection of goods and services purchased by a "typical consumer". The inflation rate is the percentage rate of change in a price index over time.

 Example :        if the CPI in 2007 was 105 and the CPI in 2008 was 130, the rate of inflation was?