the price of things has risen while your salary did not, meaning you have lesser number of items you can buy with the money you have as compared to what you could have bought before inflation.
A 0% inflation rate means that money is not losing or gaining any buying power.
a rise in prices that occurs when currency loses its buying power
Inflation
$1.00 in 1990 had the same buying power as $1.71 in 2010. Annual inflation over this period was 2.73%. $1.00 in 1991 had the same buying power as $1.61 in 2010. Annual inflation over this period was 2.55%.
$1.00 in 1960 had the same buying power as $8.05 in 2016.
A 0% inflation rate means that money is not losing or gaining any buying power.
a rise in prices that occurs when currency loses its buying power
After Trajan, there was no increase in the source of funds to be spent by the state, so the currency became debased and lost buying power. As inflation rose, buying power shrank, and like economies today, people's prosperity dropped.
Inflation
$1.00 in 1990 had the same buying power as $1.71 in 2010. Annual inflation over this period was 2.73%. $1.00 in 1991 had the same buying power as $1.61 in 2010. Annual inflation over this period was 2.55%.
$1.00 in 1960 had the same buying power as $8.05 in 2016.
A dollar in 1860 would have the buying power of $28.90 in 2014 due to inflation.
there was a decrease in the buying power of the dollar, brought about by too much money in circulation
To determine the buying power of $1.00 in 1956 in terms of 2009 dollars, we can use historical inflation data. Generally, prices have increased significantly over that period, with an average inflation rate of around 3.5% per year. Based on cumulative inflation, $1.00 in 1956 would be equivalent to approximately $8.00 to $9.00 in 2009, reflecting the substantial decrease in purchasing power over the decades.
From the worker's perspective, raises are judged good or bad in reference to inflation. Its really a question of buying power more than the actual amount of money. Think of this example... If inflation is running 2% per year and you get a 2% raise, you break even. Your salary buys the same stuff at the start the year and the end of the year. If inflation is 2% and you got a 4% raise, you're now making more money than before. You have more buying power relative to the economy as a whole. So as a worker, your goal is to be able to buy more each time you get a raise. So if inflation is low, you can accept a lower raise and still increase buying power as long as the raise is higher than inflation. So when infaltion is low, a low raise (that's still bigger than the rate of inflation) just as effective as a large raise when inflation is high.
In 1838 a $100.00 was worth $100.00. Given the effect of inflation the buying power then for a given amount would be greater than at some later point in time. If you knew the inflation rate from then to now you could compute the buying power then in today's dollars. It is not a perfect calculation as there are somethings that dropped in cost as improvements were made.
demand pull inflation is caused by increase in the income of of individuals, ie if aggregate demand exceeds aggregate supply, whichl leads to an increase in thear purchasing power. therefore, t he government can use the taxation pollicy to combat the demand pull inflation by using the budget for surplus where she will receive more from the individuals in the form taxes, this will reduce the amount of money from individualsw whichthey would have spent and this will help to reduce their purchasing power, as this consequently reduce or cure demand pull in inflation