Inflation definition

A - B - C - D - E - F - G - H - I - L - M - N - O - P - Q - R - S - T - U - V - W - Y

See all glossary trading terms

Inflation is the increase in the cost of goods and services in an economy. As that in turn means that each unit of the currency’s economy is worth less of any good or service, inflation can also be viewed as a devaluing of currency.

The opposite of inflation – when the cost of goods and services goes down, and each unit of currency therefore increases in value – is called deflation.

Keeping inflation levels consistent and in check is the remit of a central bank, who will generally work towards an inflation target. Inflation is usually measured using a consumer price index (CPI), which tracks the cost of a basket of consumer goods and services.

Changes in inflation can have a major impact on financial markets, as they affect purchasing power and can bring about change in a central bank’s monetary policy. 

Visit our economic calendar

Keep track of inflation announcements around the globe with IG's economic calendar.

Contact us

We're here 24hrs a day from 7pm Saturday to 9am Saturday (AEDT).

1800 601 734

You can also call +61 (3) 9860 1734, email or tweet us at @IGClientHelp