Inflation

Inflation may be defined as a persistent increase in price overtime. In other words the rate of inflation is measure by changes in the purchasing power of money.

There are a number of ways in which inflation can be measured one method is by measuring changes in the retail price index (RPI).

The RPI measures the change in prices from month to month in a representative busked of commodities bought by the average consumer.

The commodities in the busked are weighted differently to indicate the proportion of expenditure by the average consumer on variances items.