There is this close event happening to you everyday. You go to the market to buy food or other commodities and find out that the price is changing. It could be cheaper or more expensive. Inflation is when you experience those products are escalating in prices. It could be in commodities or services. Inflation is when the price is higher than its normal condition affecting the overall economy.
Why does the price increase, what happens? In order to live a comfortable life there should be regulation in stabilizing prices in the market. It includes everything from food, metal, fuel, electricity, transportation to services like healthcare and entertainment. Inflation occurs when there is an overall increase in the products and services in a certain time.
In a simpler point of view, households may spend differently based on the consumption. During the year the consumed product and services are called basket items. Changes of price influenced the total budget spent in each household. For example, it takes you additional budget due to price increase compared to last year.
Inflation measures the overall impact of price changing for a set of products and services. It allows a single value representation in the price level increase of goods and services. As a result, the currency value might decrease. When the currency value decreases, prices rise. Price surge can push down consumption, so buying goods and services would be fewer. It has a significant impact on the overall economic growth. The loss of purchasing powers impacts the public living cost.
