<P> The adoption of fiat currency by many countries, from the 18th century onwards, made much larger variations in the supply of money possible . Since then, huge increases in the supply of paper money have taken place in a number of countries, producing hyperinflations--episodes of extreme inflation rates much higher than those observed in earlier periods of commodity money . The hyperinflation in the Weimar Republic of Germany is a notable example . Currently, the hyperinflation in Venezuela is the highest in the world, with an annual inflation rate of around 536.2% as of October 2017 . </P> <P> The term "inflation" originally referred to increases in the amount of money in circulation . However, it is common for economists today to use the term "inflation" to refer to a rise in the price level . An increase in the money supply may be called monetary inflation, to distinguish it from rising prices, which may also for clarity be called "price inflation". Economists generally agree that in the long run, inflation is caused by increases in the money supply . </P> <P> Conceptually, inflation refers to the general trend of prices, not changes in any specific price . For example, if people choose to buy more cucumbers than tomatoes, cucumbers consequently become more expensive and tomatoes cheaper . These changes are not related to inflation, they reflect a shift in tastes . Inflation is related to the value of currency itself . When currency was linked with gold, if new gold deposits were found, the price of gold and the value of currency would fall, and consequently prices of all other goods would become higher . </P> <P> Other economic concepts related to inflation include: deflation--a fall in the general price level; disinflation--a decrease in the rate of inflation; hyperinflation--an out - of - control inflationary spiral; stagflation--a combination of inflation, slow economic growth and high unemployment; reflation--an attempt to raise the general level of prices to counteract deflationary pressures; and Asset price inflation--a general rise in the prices of financial assets without a corresponding increase in the prices of goods or services . </P>

Inflation means specific prices are rising and relative prices are falling