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If the price level rises at a faster rate, the inflation rate increases.
Inflation is measured with a price index.
The two main measures of inflation are: the Retail Price Index (RPI) and Consumer Price Index (CPI).They measure an average of the prices paid by costumer for a fixed basked of goods and services included such items as food, heating, housing goods, bus fares and petrol.
One of the several variations on inflation is hyperinflation. When it occurs, the value of money becomes worthless. Although it is extremely rare it may lead to the breakdown of a nation's monetary system. One of the most famous happened in Germany between 1921 and 1923 and Turkey in 1999 when inflation reached 70%...
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