measurement of inflation

Inflation measurement tracks how the prices of a typical basket of goods and services change over time. Economists select a representative group of items—like food, housing, transportation—and record their prices regularly. By comparing the total cost of this basket from one period to another, they determine the inflation rate, which shows how much prices are generally rising. Common measures include the Consumer Price Index (CPI) and the Producer Price Index (PPI). This helps policymakers, businesses, and consumers understand economic stability and adjust their decisions accordingly.