Economy · General financial education

Inflation

Inflation means prices rise overall. The same money buys less.

In more detail

Inflation is a broad rise in the price level. A lower positive inflation rate means prices rise more slowly, not that they fall overall. Your own spending basket may behave differently.

Background

Price indices weight goods and services by typical spending shares. Personal inflation may differ. Base effects and weights affect the annual rate; a single price does not represent overall inflation.

An example

A basket rises from €100 to €103: 3% inflation. Another 2% rise next year makes it €105.06.

A common misconception

When the inflation rate falls, prices fall.

A lower positive rate means prices rise more slowly. They fall only if inflation is negative.

Source: European Central Bank · Inflation. Last reviewed: 2026-11-09. Editorially reviewed on 2026-11-09. Next review 2027-11-09. Version 0.2.0. Finmon explains. It does not advise. Not investment, tax or legal advice.