The percent increase in the cpi from one year to the next is a measure of the inflation rate.
A rise in the cost of the products and services that households purchase is referred to as inflation. It is calculated as the pace at which such prices change. Prices often increase over time, but they can also decrease (a situation called deflation).
The Consumer Price Index (CPI), which calculates the percentage change in the cost of a selection of products and services that families typically use, is the most well-known measure of inflation.
By allowing the labour market to respond more rapidly during a downturn, low inflation lessens the severity of economic recessions and lowers the danger that a liquidity trap will prevent monetary policy from stabilising the economy, all while avoiding the costs associated with high inflation.
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