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inflation

noun

/ɪnˈfleɪ ʃən/

IPA:

Dictionary definition of inflation

A sustained increase in the general price level of goods and services within an economy over time.
"The central bank implemented measures to curb inflation and stabilize the economy."

Detailed meaning of inflation

It is typically accompanied by a decrease in the purchasing power of currency, as the same amount of money can buy fewer goods and services. Inflation occurs due to various factors, such as increased demand, rising production costs, expansionary monetary policies, or a decrease in the value of currency. While some level of inflation is considered normal and even desirable for a healthy economy, excessive inflation can have negative consequences. High inflation erodes the value of savings, reduces consumers' purchasing power, and can lead to economic instability. Central banks and policymakers often aim to manage inflation by implementing monetary policies and maintaining price stability. Tracking inflation is crucial for economic indicators and policy decisions, as it impacts wages, interest rates, investments, and the overall cost of living for individuals and businesses.

Example sentences containing inflation

1. High inflation erodes the purchasing power of consumers.
2. The government implemented measures to control inflation and stabilize the economy.
3. The rise in oil prices contributed to inflationary pressures on the economy.
4. Hyperinflation can lead to economic instability and social unrest.
5. The central bank closely monitors inflation rates to make informed monetary policy decisions.
6. Inflation can impact the cost of living, affecting people's everyday expenses.

History and etymology of inflation

The noun 'inflation' also has its etymological roots in Latin. It is derived from the Latin word 'inflatio,' which is formed from 'inflare,' combining 'in' (meaning 'into') and 'flare' (meaning 'to blow'). Therefore, the etymology of 'inflation' conveys the idea of 'blowing into' something, which is metaphorically applied to economics. Originally, it referred to the act of inflating or expanding currency by introducing more money into circulation, which could lead to a rise in prices. Over time, the term evolved to describe the sustained increase in the general price level of goods and services within an economy, a phenomenon that is often associated with an excessive increase in the money supply. Thus, 'inflation' in economic terms signifies the expansion of prices and monetary value, reflecting its modern usage in the context of economic fluctuations.

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Further usage examples of inflation

1. The company adjusted its prices to account for inflation in raw material costs.
2. The annual inflation rate reached its highest level in a decade.
3. The economist predicted that inflation would exceed the target rate this year.
4. Rising inflation erodes the real value of savings and investments.
5. Inflation can negatively affect the profitability of businesses by increasing production costs.
6. The government implemented fiscal policies to combat inflationary pressures.
7. The central bank raised interest rates to curb inflationary pressures in the economy.
8. Rapid inflation can lead to a decrease in consumer spending and business investments.
9. Inflation can erode the value of long-term fixed-income investments.
10. High inflation can lead to wage-price spirals, causing further price increases.
11. The government implemented price controls to mitigate the effects of inflation.
12. Inflation expectations among consumers can influence their spending and saving behavior.
13. The inflationary period of the 1970s was characterized by high unemployment and rising prices.
14. The central bank's primary mandate is to maintain price stability and control inflation.
15. The country's economy is grappling with high inflation, causing prices to skyrocket.
16. Inflationary pressures led to an increase in the cost of living for ordinary citizens.
17. Businesses struggled to maintain profitability amid rising inflationary trends.
18. The government introduced policies to address inflation and protect consumers from price hikes.
19. Inflation eroded the value of savings, prompting individuals to seek investment opportunities.
20. The finance minister outlined strategies to tackle inflation and restore economic stability.
21. Inflationary expectations prompted investors to diversify their portfolios and hedge against rising prices.
22. The retail sector faced challenges as consumers cut back on spending due to inflation.
23. Wage increases failed to keep pace with inflation, leading to a decline in real incomes.
24. Rising inflation contributed to a decline in the purchasing power of the national currency.
25. The inflation rate surpassed projections, posing challenges for policymakers to maintain price stability.