Inflation is the decline in the purchasing power of the local currency. The Consumer Price Index (CPI) is a commonly used measure of inflation.
Inflation refers to an increase in the prices of goods and services, resulting in a decrease in the purchasing power of a local currency. Therefore, players need more units of currency to purchase certain items. For example, a few years ago a fruit basket might have cost $5. The same basket now has a price tag of $8, indicating a decline in purchasing power.
The chart below shows how the prices of some commodities in the United States have soared between 1960 and 2021:
The Consumer Price Index (CPI) is a commonly used measure of inflation that combines a weighted average of a basket of prices for various goods and services. The CPI indicator affects interest rates, wages, state benefits, tax subsidies, pensions, maintenance fees, contracts and other payments.