| Inflation is a lasting price increase, or fall in the purchasing power of money. Inflation may be due to increasing demand for goods and services or be caused by higher prices in a company's input factors (raw materials, wages, etc.). Price rises in imported raw materials and consumables can also produce inflation. In addition, expectations of inflation can contribute to price increases. In an economy affected by inflation over an extended period, people become used to prices and wages gradually increasing. Companies and organisations will then attempt to take account of expectedinflation when setting prices and wages. Inflation is the opposite of deflation. |