Inflation is the rate at which prices for goods and services rise in an economy. It is typically measured over a year and can be calculated for specific goods or services, or for the overall economy. Inflation reduces the purchasing power of money, meaning that a unit of currency buys less than it did in the past. Some causes of inflation include an increase in the supply of money, pressures on the supply or demand side of the economy, and supply shocks
. Inflation can be classified into three types: demand-pull inflation, cost- push inflation, and built-in inflation
. Inflation is measured using various indexes, such as the Consumer Price Index (CPI) and the Wholesale Price Index (WPI), which track price changes across a specific set of goods and services
. The rate of inflation is expressed as a percentage, with any increase higher than 2% generally considered high
. Inflation can have a significant impact on people's finances, as it reduces the purchasing power of money. To protect oneself from inflation, individuals can invest in assets that tend to hold their value during periods of inflation, such as real estate or commodities
