Inflation
Inflation is a persistent rise in the general price level of goods and services, reducing the purchasing power of money. It is measured as an annual percentage change. Inflation affects saving, investment, and real income.
Real World
UK inflation hit 11.1% in October 2022, driven by surging energy prices after Russia's invasion of Ukraine, squeezing household budgets as wages failed to keep pace with rising food and fuel costs.
Exam Focus
Distinguish cost-push from demand-pull inflation in every answer — the appropriate policy response differs for each cause.
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