GLOSSARY
Inflation Glossary
Every term you'll encounter when reading about inflation — defined plainly, with no jargon left unexplained.
38 terms
Three words everyone mixes up
Inflation
A sustained rise in the general level of prices, so each unit of money buys less over time.
US 2017–19Disinflation
A slowdown in the rate of inflation — prices still rise, just more slowly than before.
US 2022–24Deflation
A sustained fall in the general price level: the inflation rate is below zero.
Armenia 2015–17A
B
C
Central bank
The institution that sets monetary policy and is usually charged with price stability.
Data & methodsChain-linking
Joining an old and a new index series on an overlap so history stays continuous.
MeasuresCOICOP
The UN classification of household spending into categories such as food, housing and transport.
MeasuresConsumer price index (CPI)
An index of the prices of a fixed basket of goods and services bought by households.
Rates & mathsContribution
How many points of headline inflation come from one category.
MeasuresCore inflation
Inflation excluding volatile items, usually food and energy. Definitions vary by country.
BasicsCost of living
What a household must spend to keep a given standard of living.
MeasuresCPI-U
The US consumer price index for all urban consumers, the most-quoted US measure.
Rates & mathsCumulative inflation
The total, compounded change in prices between two dates.
D
H
Headline inflation
The inflation rate for all items index, including everything in the basket.
MeasuresHICP
The EU's Harmonised Index of Consumer Prices, built to the same rules in every member state.
BasicsHyperinflation
Extremely rapid, out-of-control inflation, classically prices rising more than 50% in a month.
I
Inflation
A sustained rise in the general level of prices, so each unit of money buys less over time.
Data & methodsIndex base period
The period set equal to 100 in a price index, for example 2015 = 100.
PolicyIndexation
Automatically adjusting wages, pensions or rents in line with a price index.
PolicyInflation target
The rate a central bank aims to keep inflation at, such as 2%.
P
PCE price index
A US measure of consumer spending prices; the Federal Reserve's preferred gauge.
Rates & mathsPercentage point
The plain difference between two percentages: from 3% to 4% is one percentage point.
PolicyPolicy rate
The key interest rate a central bank sets to influence borrowing and inflation.
BasicsPrice level
The average level of prices in an economy at a point in time, measured by an index.
BasicsPurchasing power
How much a unit of money can buy. Inflation reduces it.
R
Real interest rate
An interest rate minus inflation — what savers earn in buying-power terms.
Rates & mathsReal vs. nominal
Nominal values are in current money; real values are adjusted for inflation.
Data & methodsRebasing
Changing an index's base period. It moves the index level but not inflation rates.
BasicsReflation
A period or policy that pushes inflation back up from very low levels.
Data & methodsRelease calendar
The published schedule of when a statistics office will release new figures.
Data & methodsRevision
A change in a previously published figure, usually as more complete data arrives.