Inflation

A sustained increase in the general price level of goods and services in an economy over time, measured by metrics like the Consumer Price Index (CPI) and the Personal Consumption Expenditures (PCE) index. Moderate inflation of around 2% is considered healthy by most central banks, but runaway inflation erodes purchasing power and destabilizes markets. The Federal Reserve's aggressive rate-hiking cycle starting in 2022 was a direct response to inflation reaching 9.1%, the highest reading in over 40 years.