<P> In economics, inflation is a sustained increase in price level of goods and services in an economy over a period of time . When the price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money--a loss of real value in the medium of exchange and unit of account within the economy . A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index, usually the consumer price index, over time . The opposite of inflation is deflation . </P> <P> Inflation affects economies in various positive and negative ways . The negative effects of inflation include an increase in the opportunity cost of holding money, uncertainty over future inflation which may discourage investment and savings, and if inflation were rapid enough, shortages of goods as consumers begin hoarding out of concern that prices will increase in the future . Positive effects include reducing the real burden of public and private debt, keeping nominal interest rates above zero so that central banks can adjust interest rates to stabilize the economy, and reducing unemployment due to nominal wage rigidity . </P>

An increase in the average level of prices is called