- published: 14 Feb 2012
- views: 180873
In economics, the inflation rate is a measure of inflation, or the rate of increase of a price index such as the consumer price index. It is the percentage rate of change in price level over time, usually one year. The rate of decrease in the purchasing power of money is approximately equal.
The inflation rate is used to calculate the real interest rate, as well as real increases in wages. Official measurements of this rate are input variables to COLA adjustments and inflation derivatives prices.
The rate is usually expressed in annualized terms, though measurement periods are not usually one year. Inflation rates are often given in seasonally adjusted terms, removing systematic quarter-to-quarter variation.
If Failed to parse (Missing texvc executable; please see math/README to configure.): P_0
After the year the purchasing power of a unit of money is multiplied by a factor 1 / ( 1 + inflation rate ).
There are other ways of defining the inflation rate, such as Failed to parse (Missing texvc executable; please see math/README to configure.): \log P_0 - \log P_{-1}
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