Glossary · from the DESK dictionary
Inflation
The sustained rise in the general price level in an economy.
In plain words
When money loses purchasing power over time because prices rise on average.
In more detail
Central banks manage inflation primarily via the policy rate (see monetary policy), usually targeting low, stable inflation rates (often around 2%). Inflation is one of the central drivers of interest rate decisions and thus of virtually every asset class.
Example
A 3% inflation rate means a basket of goods that cost €100 last year costs about €103 today.
What it means for traders
One of the single most important macroeconomic figures for rates, bond, and equity markets.
Common pitfalls
Unexpectedly high inflation can trigger aggressive rate hikes and market turmoil.
Related terms
After-Tax Real Rate of Return · Aggregate Demand · Argentine Peso (ARS) · Atlanta Fed Business Inflation Expectations · Base Effect · Consumer Price Index (CPI) · Core Inflation · Cost-of-Living Adjustment (COLA) · Deflation · Demand-Pull vs. Cost-Push Inflation · Disinflation · Equation of Exchange · Fiscal Drag · Money Supply · Monetary Policy · Gold as an Inflation Hedge · Greenflation · Hyperinflation · Inflation Breakeven Rate · Inflation Hedge · Inflation Tax · Policy Rate · Milton Friedman · Paul Volcker · Real Interest Rates · Turkish Lira · Wage-Push Inflation
From the DESK dictionary. For information only, not investment advice.
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DESK is a research tool and not investment advice. Page generated: 2026-10-12.