inflation

Inflation is the overall rise in price of goods or services. The Dallas Federal Reserve explains that inflation is measured through the Consumer Price Index (CPI). Economists refer to the CPI as the assembly of various goods into a metaphorical “basket,” with some goods weighted more than others. In this basket are goods like housing, transportation, recreation, apparel, health care and food and beverages. The item with the most weight is housing, which accounts for 42 percent of the CPI’s measurement. Inflation is caused by a few things, but the primary cause is the amount of money circulating in the money supply. The more currency printed, the more inflation will rise. Countries attempt to control inflation levels by setting low interest rates and devaluing their currency on the global exchange market.