I: Inflation

What is inflation?

Inflation is a monetary phenomenon that refers to a general increase in prices over time. It is measured by the Consumer Price Index (CPI) and the Retail Price Index (RPI).

Prolonged periods of high inflation are typically associated with high monetary growth. While other factors (such as variations in aggregate demand, technological changes, or commodity price shocks) can influence price developments over shorter horisons, their effects can be offset by a change in monetary policy over a period of time.

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