In economics, the inflation rate is a measure of inflation, or the rate of increase of a price index such as the consumer price index. It is the percentage rate of change in price level over time, usually one year. The rate of decrease in the purchasing power of money is approximately equal.
The inflation rate is used to calculate the real interest rate, as well as real increases in wages. Official measurements of this rate are input variables to COLA adjustments and inflation derivatives prices.
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“Put God in your debt. Every stroke shall be repaid. The longer the payment is withholden, the better for you; for compound interest on compound interest is the rate and usage of this exchequer.”
—Ralph Waldo Emerson (1803–1882)