Inflation

Inflation is the rate at which the general price level of goods and services rises over time, eroding the purchasing power of a currency. It's measured primarily through indices like the CPI and PCE, and it's one of the two mandates (alongside employment) most central banks are legally tasked with managing. Moderately rising inflation tends to push a central bank toward higher interest rates, which generally supports the currency; runaway inflation (or its opposite, deflation) both create serious policy and currency-stability challenges.