Inflation?? the big picture..

Dont u keep wondering wads this inflation shit all abt...hope the followin answers ur questions ot a certain extent!

Inflation is an increase in the price of a basket of goods and services that is representative of the economy as a whole.

The easiest way to illustrate inflation is through an example. Suppose you can buy a dosa for 15 bucks this year and yearly inflation is 10%. Theoretically, 10% inflation means that next year the same dosa will cost 10% more, or 16.50. So, if your income doesn't increase by at least the same rate of inflation, you will not be able to buy as many dosas However, a one-time jump in the price level caused by a jump in the price of oil or the introduction of a new sales tax is not true inflation, unless it causes wages and other costs to increase into a wage-price spiral. Likewise, a rise in the price of only one product is not in itself inflation, but may just be a relative price change reflecting a decrease in supply for that product. Inflation is ultimately about money growth, and it is a reflection of too much money chasing too few products.

Note:-Inputs from google..am lame when it comes to this shit:p