Inflation

Inflation is a persistent increase in the prices of goods and services. Inflation results in less bang for the buck. And, if wages fail to keep pace with inflation, the result is a decrease in real wages (i.e., purchasing power decreases as a given income can purchase less and less). Inflation is usually measured as an annual percentage rate of change. In the United States, the inflation rate is measured by the Consumer Price Index, which is published each month by the U.S. Bureau of Labor Statistics.