... not think of this as inflation. Inflation occurs when most prices are rising by some degree across the whole economy. the inflation rate We often hear about the rate of inflation being 2.3% or 2.7% or some other number. The inflation rate is a measure of the average change in prices across the economy over a specified period, most commonly 12 months - the annual rate of inflation. We typically hear about the annual inflation rate for a particular month. The annual rate of retail price inflation in July 2003 was 3.1%. This means prices overall were 3.1% higher in July 2003 than they were in July 2002. So a typical basket of goods and services costing, say, Rs.100 in July 2002 cost Rs.103.10 in July 2003. There are many reasons why prices go up, thereby increasing measured inflation. For example, inflation may result from increased demand for a particular product, say ...

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