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Line 21: Other economic concepts related to inflation include: [[deflation]]{{snd}}a fall in the general price level; [[disinflation]]{{snd}}a decrease in the rate of inflation; [[hyperinflation]]{{snd}}an out-of-control inflationary spiral; [[stagflation]]{{snd}}a combination of inflation, slow economic growth and high unemployment; [[reflation]]{{snd}}an attempt to raise the general level of prices to counteract deflationary pressures; and [[asset price inflation]]{{snd}}a general rise in the prices of financial assets without a corresponding increase in the prices of goods or services. In general, inflation is a trend of relative price increases caused by the amount of [[currency]]{{snd}} in circulation that is much higher than the amount actually needed by the economy. If the government incorrectly predicts the amount of currency in circulation and continues to increase the issuance of banknotes, the [[purchasing power]]{{snd}} of the currency will continue to decline. <ref>{{cite web \|url=https://zhuanlan.zhihu.com/p/346046987#:~: \|title=外汇经济指标解读（三）---通货膨胀（PPI、CPI、RPI）详解 \|date =January 21, 2021 \|work=Vox \|access-date=April 25,2021}}</ref> In [[macroeconomics]]{{snd}}, inflation occurs only when the prices of most [[goods and services]]{{snd}} within a country rise consistently over a period of time. An increase in the price of a single commodity cannot be called inflation. <ref>Robert E. Hall [http://www.nber.org/books/hall82-1], “Inflation: Causes and Effects,” 1982. </ref> == Background == Line 40 ⟶ 36: However, since the 1980s, inflation has been held low and stable in countries with strong independent [[central bank]]s. This has led to a moderation of the [[business cycle]] and a reduction in variation in most macroeconomic indicators - an event known as the [[Great Moderation]].<ref>{{cite news \|url= http://www.timesonline.co.uk/tol/comment/columnists/article1294376.ece \|title=Welcome to 'the Great Moderation' \|first=Gerard \|last=Baker \|work=The Times \|date=2007-01-19 \|publisher=Times Newspapers \|location=[[London, England\|London]] \|issn=0140-0460 \|access-date=15 April 2011}}</ref> After entering the 1970s, the [[floating]]{{snd}} exchange rate system was adopted by more and more countries, resulting in a correlation between inflation and exchange rate changes. The rise in the prices of most commodities and services over a period of time not only affects the domestic [[price level]], but also affects the exchange rate changes of national currencies in the global currency market. For example, in the 1990s, the yen's exchange rate has remained within a relatively stable range. <ref>Robert E. Hall [http://www.nber.org/books/hall82-1], “Inflation: Causes and Effects,” 1982. </ref> During this time, [[Japan]]'s domestic inflation rate has been maintained within a reasonable range. <ref>{{cite news \|url=https://www.forbes.com/advisor/investing/what-is-inflation/ \|title= What Is Inflation And How Does It Work? \|date=July 14, 2020 \|publisher=ForbesADVISOR \|access-date=April 25, 2021}}</ref>On the contrary, the domestic inflation rate of [[Western European]] countries such as the [[United Kingdom]] was higher than the average level at the same time, which also led to huge exchange rate fluctuations. ==History== Line 88 ⟶ 83: * '''[[Producer price index\|Producer price indices]]''' (PPIs) which measures average changes in prices received by domestic producers for their output. This differs from the CPI in that price subsidization, profits, and taxes may cause the amount received by the producer to differ from what the consumer paid. There is also typically a delay between an increase in the PPI and any eventual increase in the CPI. Producer price index measures the pressure being put on producers by the costs of their raw materials. This could be "passed on" to consumers, or it could be absorbed by profits, or offset by increasing productivity. In India and the United States, an earlier version of the PPI was called the [[Wholesale price index]]. * '''[[Commodity price index\|Commodity price indices]]''', which measure the price of a selection of commodities. In the present commodity price indices are weighted by the relative importance of the components to the "all in" cost of an employee. * '''[[Consumer Price Index\|Consumer Price indices]]''', which is a method that uses a fixed basket price of consumer goods to measure the inflation rate, expressed as a percentage. In the United States, the consumer price index is composed of seven categories, including: food, clothing, transportation, medicine, entertainment, beverages, housing, and other commodities and services. The US consumer price index includes two types, one is the [[Consumer Price Index for workers and employees]] (CPX), and the other is the [[Consumer Price Index for urban consumers]] (CPIU). * '''[[Core inflation\|Core price indices]]''': because food and oil prices can change quickly due to changes in [[supply and demand]] conditions in the food and oil markets, it can be difficult to detect the long run trend in price levels when those prices are included. Therefore, most [[List of national and international statistical services\|statistical agencies]] also report a measure of 'core inflation', which removes the most volatile components (such as food and oil) from a broad price index like the CPI. Because core inflation is less affected by short run supply and demand conditions in specific markets, [[central bank]]s rely on it to better measure the inflationary impact of current [[monetary policy]].

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