Define: Inflation

UK Accounting Glossary

Definition: Inflation



What is the dictionary definition of Inflation?

Dictionary Definition


  1. An act, instance of, or state of expansion or increase in size, especially by injection of a gas.
  2. economics An increase in the general level of prices or in the cost of living.
  3. economics A decline in the value of money.

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Full Definition of Inflation


Inflation is a broad increase in prices. In practical terms, inflation means goods and services are being valued as more desirable than money. This also affects wages; periods of high inflation tend to be marked by increases in average income. Inflation can be caused by either too few goods offered for sale, or too much money in circulation. The most common measure of inflation is the consumer price index (CPI).

Prior to Bretton Woods and the elimination of the gold standard, persistent inflation was relatively rare. In the US, for example, inflation for the entire period from the Revolution through to 1914 was four per cent. The move from currencies backed by hard assets to floating currencies backed by the “full faith and credit” of governments has nearly eliminated deflation by removing impediments to printing more currency. Consequently, excessive inflation has become the primary concern of central banks.


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Definition Sources


Definitions for Inflation are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • BusinessDictionary.com
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 9th February 2020.