Inflation in Economics

Inflation in Economics means a sustained increase in the aggregate or general price level in an economy and there is an increase in the cost of living. It effectively measures the change in the prices of a basket of goods and services in a year. It alsao reflects a reduction in the purchasing power per unit of money, a loss of real value in the medium of exchange and unit of account within the economy. Inflation in Economics occurs due to an imbalance between demand and supply of money, changes in production and distribution cost or increase in taxes on products.