inflation rate

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The rate of increase of a specified price index. The inflation rate is typically measured in annual terms, though it can be defined over any chosen time period (e.g. monthly or weekly). If p0 is the price level at time 0 and p1 the price level at time 1 the inflation rate is defined by


In the UK inflation is measured using both the consumer price index and the retail price index (RPI). The major difference between these indices is that the RPI includes items related to owner–occupier housing costs, particularly mortgage interest payments.

Subjects: Economics.

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