Inflation refers to the rate at which the general level of prices for goods and services in an economy is increasing over time. This is usually expressed as a percentage. The rise in prices results in weakened purchasing power per unit of currency, as more money is needed to buy the same amount of goods and services.

Central banks can use monetary policies to tackle inflation and prevent deflation to keep the economy stable. A moderate level of inflation can stimulate spending and economic growth, making it generally favourable for the economy.

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