PPBE Process

Inflation

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Inflation is defined as a sustained rise in the general price level, or the proportionate rate of increase in the general price level per unit of time. The opposite of inflation is deflation, which is a general decrease in the price level of most commodities. [1]

DoD Inflation Handbook – Feb 2006

 Inflation is a simple concept that affects any purchase, expense or asset accumulation over time. In the simplest terms inflation is the change in general price levels over time. The concept of inflation for a single product is the price change for that product over time. But once one considers multiple goods and products the concept becomes much more unwieldy. In the macroeconomic sense inflation is the change in buying power of money over time, and this is a familiar concept to most of us. There are considerable complexities, however, in comparing prices over time when the goods in the economy are not purchased in the same proportions, and are not constant in quality. The problem is more complex when we consider subsets of the economy. The Federal Government increases that complexity even further by comparing dollars which are appropriated in a given year, but spent over a period of years. [1]

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