What is inflation and how is it measured in your economy?

• Demand pull inflation

• Cost push inflation

• The symptom of inflation is raising prices and the rate of inflation is a measure of how fast prices are rising.

In the UK there are several measures of inflation, all using index number techniques. The main ones are:

a) the Consumer Price Index, CPI

b) the Retail Price Index, RPI which has two distinct measures. One includes housing costs such as the mortgage interest rate. The other measure excludes these costs.