Back to Glossary
Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.
In Depth
When inflation occurs, each dollar you own buys fewer goods and services than it could before. This means that if your income doesn't keep pace with inflation, your standard of living can decline. Central banks often try to manage inflation to keep it at a healthy level, typically around 2-3% per year, to promote economic stability.
Example
If a loaf of bread cost $2 last year and costs $2.20 this year, that's an example of 10% inflation for bread.