Inflation Inflation is the rate at which the level of the cost of goods and services in the marketplace all go up at once which causes consumers' purchasing power to decline. In simple terms inflations is the rise in the cost of living.

What causes Inflation There is a strong link between inflation and money supply, many economist believe if the amount of money in circulation rises so will prices. Demand in the economy; if demand for products exceeds the capacity of factories to build them, prices will rise. Prices fall if fewer and fewer people want to buy those products. Some economist warn that the higher inflation rate we’ve been seeing is a result of all the economic stimulus that governments have been injecting to try to deal with the recession of

How is Inflation measured in Canada? Statistics Canada tracks Canada’s inflation rate through the Consumer Price Index The Consumer Price Index (CPI) is an indicator of changes in consumer prices experienced by Canadians. It is obtained by comparing, over time, the cost of a fixed basket of goods and services purchased by consumers. Since 1992, the rate of CPI inflation in Canada has fluctuated around 2 per cent

Deflation Is the opposite of inflation. When prices fall you have deflation. Most governments don't want to see prices fall. If people believe it will cost less to buy something in a month, they'll put off that purchase. If enough people do that, then prices will come down, but this can cause a downward spiral as if people stop purchasing; companies stop producing products, and as demand falls and people lose their jobs.

Stagflation This is when an economy is at a stand still and prices for goods and services still rise. This is usually a time of very slow economic growth and a high unemployment rate. This can result in a recession.

Hyperflation Is the worst of all “flations” Many economists agree that hyperinflation is: “an inflationary cycle without any tendency toward equilibrium." It can be a vicious circle of constant and rapidly rising prices. There are many factors can cause hyperinflation but the most direct cause is an unchecked increase in the money supply.