Inflation
An increase in prices, also reflected as a decrease in purchasing power, the rate of which is measured by the Consumer Price Index (CPI). |
Similar financial terms
Inflation risk on bondsIf investors purchase a bond on which they can realize a coupon rate of 5% but the rate of inflation is 6%, the purchasing power of the cash flow actually has declined. Inflation risk arises because of the variation in the value of cash flows from a security due to inflation, as measured in terms of purchasing power.
Hyperinflation
This refers to very rapid, out-of-control inflation. There is no exact definition of what consitutes hyperinflation. In 1922 this occurred in Germany when the country printed banknotes so liberally that consumers had to take bags full of currency to make purchases. Inflation has been over 100% for many countries at various times in their history. Since inflation for stable economies is in the low single-digits, it is generally understood that inflation above 10% would constitute hyperinflation. ...
