Inflation Index

An inflation index is a tool used to measure how the overall prices of goods and services in an economy change over time. It provides a way to track the cost of living and inflation by comparing current prices to a base year. For example, if the inflation index rises, it indicates that prices have increased, meaning your money buys less than before. This index helps governments, businesses, and individuals understand economic trends, plan budgets, and make informed financial decisions. Common examples include the Consumer Price Index (CPI) and the Producer Price Index (PPI).