Inflation rate

From Financial Literacy Wiki

In economics, the inflation rate is a measure of inflation, the rate of increase of a price index (for example, a consumer price index also commonly known as CPI). It is the percentage rate of change in price level over time. For example, to get the inflation rate for the year 2010, taking the CPI index as at January 2010 minus the CPI Index as at January 2009. Divide the results by the CPI Index as at January 2009 to get the inflation rate. The rate of decrease in the purchasing power of money is approximately equal.

The inflation rate is used to calculate the real interest rate, as well as real increases in wages. Official measurements of this rate are input variables to COLA adjustments and inflation derivatives prices.