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Inflation - Coggle Diagram
Inflation
Key points
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Inflation is measured by calculating the change in a weighed price index over time. In the UK the two main measures are Consumer Price Index (CPI) and Retail Prices Index (RPI)
A price index only measures inflation for average households. It also cannot take into account changes in the quality and distribution of goods over time
Inflation may be demand-pull or cost-push depending on whether it is caused by excess demand or rising costs.
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Deflation, falling prices, tends to lead to depressed demand in an economy.
Inflation, deflation and disinflation
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The costs of deflation
Over the past 50 years, the main problem that counties have faced is high rates of inflation
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Consumer price index
Office for national statistics collects prices of 720 goods and services from 20,000 shops ion 141 locations and online sites and the prices are updated every month with collectors visiting the same retailers to monitor identical goods
New items are added to the list every single year such as microwaveable rice and nail varnish whilst others are taken away including organic carrots