what is inflation in economics?

In economics, inflation refers to a sustained increase in the general price level of goods and services over time, which leads to a decrease in the value of money and a decline in the purchasing power of a currency. It is typically measured as a percentage change in the Consumer Price Index (CPI), which tracks the average price of a basket of goods and services consumed by households. High inflation means consumers need more money to buy the same amount of goods and services they could buy for less money before. Inflation can have positive effects on the economy, such as stimulating economic growth, but if it becomes too high, it can lead to instability, higher interest rates, and lower investment, which can harm the economy. Therefore, most central banks around the world aim to maintain stable inflation as a key goal of their monetary policy.