Inflation definition

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.

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

Help and support

Get answers about your account or our services.

Get answers

Or ask about opening an account on 0800 195 3100 or newaccounts.uk@ig.com.

We're here 24hrs a day from 8am Saturday to 10pm Friday.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.