Monday, June 15, 2009

Comparing Inflation Rates

TradingEconomics compares the inflation rates in several countries (Australia, Canada, the Euro Area, Japan, New Zealand, Switzerland, the United Kingdom, and the United States):

Inflation Rates measured by the Consumer Price Index (CPI), Year over Year (YoY)

Inflation is the rate at which the general level of prices is rising. The most well known indicator of inflation is the Consumer Price Index (CPI) which measures the average price of consumer goods and services purchased by households. High rates of inflation are often associated with fast growing economies where the demand for goods and services is higher that the country’s productive capacity. The fight against inflation is done by central banks which control the money supply by increasing or decreasing short term interest rates. For instance, the Governing Council of the European Central Bank aims at keeping annual inflation under 2% to promote price stability and sustainable growth.

(Year over year means the measurement is made in comparison to what it was at the same time in the previous year. For example, comparing the inflation rate in January 2010 with what it was in January 2009.)

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