Assuming 2011 is the base year, the inflation rate for 2013-2014 is 8 pounds of broccoli, 5 pounds of peas, 4 pounds of carrots, and nothing else.
High inflation is generally seen as harmful, but some economists believe low inflation will boost economic growth. The opposite of inflation is deflation, where prices tend to fall. The Federal Reserve is targeting 2% inflation based on the Consumer Price Index (CPI).
A general price increase over time reduces the purchasing power of consumers as they can reduce their consumption for a given amount. The consumer loses purchasing power regardless of whether inflation is his 2% or 4%. They just lose it twice as fast at a higher rate.
Annual inflation in May was 8.6%, the highest since 1981 as measured by the Consumer Price Index, according to the latest Bureau of Labor Statistics report.
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