Inflation Measurement

Inflation measurement tracks how prices for goods and services change over time, reflecting the cost of living. Economists use indices like the Consumer Price Index (CPI) to monitor these shifts by comparing the prices of a fixed basket of items—such as food, housing, and transportation—over different periods. If prices rise, it indicates inflation; if they fall, deflation. These measurements help policymakers, businesses, and consumers understand economic trends, plan budgets, and make informed decisions about savings, investments, and pricing.