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PPGPortal > Home > Concept Dictionary > I, J > Inflation


A rise in the overall level of prices in the economy.

(Peter Dungan, Toronto PPG 1003H)


It is important to note that changes in the relative prices of different goods is not inflation, as inflation only refers to a rise in the level of general prices.

The rate at which inflation is taking place is often referred to as the "inflation rate." Specifically, the inflation rate refers to the percentage change in the overall price level over a particular period of time, usually a year.

Some have argued that inflation should be viewed as a kind of tax on all people who are holding cash. This is because as the price level rises, the value money in the pockets and bank accounts of individuals and businesses drops, leaving them less wealthy in real terms than they were before.


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School of Public Policy and Governance