what is inflation 
inflation is the decline of purchasing power of a given currency over time the rate of inflation or the rate of decline in purchasing power is reflected by the consumer price index cpi cpi measures the change in an average price of a basket of selected goods and services over a specific period of time the rise in the general level of prices often expressed as a percentage means that a unit of currency effectively buys less than it did in prior periods inflation can be contrasted with deflation which occurs when the purchasing power of money increases and prices decline 