Financial Glossary

The Consumer Price Index measures the average change in prices paid by consumers for a basket of goods and services over time.

Cost of living is the amount of money needed to maintain a certain standard of living, covering expenses like housing, food, taxes, and healthcare.

Currency value is the purchasing power of a unit of money relative to goods, services, or other currencies in the global market.

Deflation is a decrease in the general price level of goods and services, often signaling weak demand and economic slowdown.

Inflation is the rate at which the general level of prices for goods and services rises over time, eroding purchasing power.

The inflation rate is the percentage change in the price level of goods and services over a specific period, typically measured annually.

An inflation adjustment modifies financial figures to account for changes in purchasing power, allowing comparison of values across different time periods.

Nominal return is the investment return before adjusting for inflation, representing the raw percentage gain or loss.

Purchasing power is the amount of goods and services that a unit of currency can buy, which decreases as inflation rises.

Real return is the annual investment return adjusted for inflation, showing the actual increase in purchasing power.

The real interest rate is the nominal interest rate minus inflation, representing the true cost of borrowing or true return on savings.

Stagflation is an economic condition combining high inflation, high unemployment, and stagnant economic growth simultaneously.