Inflation

Inflation generally reduces the purchasing power of money: when the price index rises, the same dollar amount buys fewer goods and services on average.

An inflation rate can be expressed as the percentage change in a price index between two periods.

A published CPI inflation rate may not match an individual household’s experience because households have different spending patterns from the representative consumer basket.

Different inflation indexes cover different economic scopes; for example, the GDP price index measures price changes for goods and services produced in the United States, including exports and excluding imports.