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Inflation affects everything in our financial lives. That’s why it’s important to have a basic understanding of why this widely published statistic is considered so important in so many quarters.
There are multiple calculations making up what is loosely referred to as the inflation rate.
Inflation measures the increase in prices over a period of time, which can be as short as one month or as long as 100 years.
The inflation rate is used to calculate pay increases, Social Security increases and changes in the federal income tax code.
What is inflation?
Inflation is the rate of increase in prices over a specific time period. The increase can pertain to a specific economic sector, like food, energy or health care, or it can apply to prices across the economy.
For example, if a dozen eggs cost $2 …
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