Consumers expect inflation to lead to higher future prices, which makes them inclined to make major purchases now, leading to greater demand for these items, which leads companies to raise prices, culminating in higher future inflation
In economics, inflation is defined as a general rise in the prices of goods and services in an economy. When the general price level rises, each unit of currency purchases fewer goods and services; thus, inflation corresponds to a loss of money's purchasing power.
According to the most recent Bureau of Labor Statistics report, annual inflation was 8.6% in May, the highest level since 1981, as measured by the consumer price index. Other inflation indicators have risen significantly in the last year or so, though not to the same extent as the CPI.
Monetary inflation is defined as a sustained increase in a country's money supply (or currency area).
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