Inflation
Sustained increase in general price level.
Formula
Inflation Rate = ((CPI this year − CPI last year) ÷ CPI last year) × 100
Real World
UK inflation hit 11.1% in October 2022 — the highest in 40 years — meaning a £100 weekly shop in 2021 cost around £111 a year later, squeezing household budgets and forcing businesses to raise prices.
Exam Focus
Always link inflation to a specific business impact (e.g. rising costs or falling real demand) rather than defining it in isolation.
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