... money that is changing, not the price of particular product and secondly it is an ongoing process, not a one off event. Since inflation refers to changes in the average level of prices, measurement involves consideration of movements in an index referring to the average level of prices. There is a wide range of price indices which may be used for this purpose such as the retail prices index (RPI), index of wholesale prices, a set range of commodities, or a general increase in prices including interest rates or indeed any combination of price increases the government chooses to use in the measure of inflation. To measure the inflation the percentage change in the price level is calculated, the higher the percentage the higher the increase. When compiling the RPI certain items will always receive a heavier weighting than others as the cost of a luxury car rising by 50% ...

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