Understanding inflation and how consumers think about it


A guide to a basic knowledge of one of today’s most pressing issues

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After several years of low inflation, prices have been rising rapidly for several months and despite the central banks’ efforts to slow down the increase in prices, they have kept rising. This paper aims to explain in simple words the basic concepts that a broader audience needs to understand in order to have a basic comprehension of one of today’s most pressing issues. In addition to that, this paper has a special focus on inflation expectations with the purpose to improve the general public’s knowledge about this area of study, which despite being relatively new it has developed a lot in the past decades and it has become a key factor in determining inflation policy.

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