Inflation
Inflation refers to the rise in the price of goods and services over time, leading to a decline in the purchasing power of money. It occurs when demand exceeds supply (demand-pull inflation) or when production costs rise (cost-push inflation). Inflation is typically measured using indices like the Consumer Price Index (CPI). Central banks, like the Reserve Bank of India (RBI), monitor inflation and use tools such as interest rate adjustments to control it. While moderate inflation is normal in growing economies, high inflation can erode savings and disrupt economic stability, affecting households and investments.
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