'Back in my day, this milk cost 50 cents!' That's called inflation, G-Pa.
Ya know how the humble sausage roll cost around 50 cents back in our parents’ day, and today you’re looking at around $5.50? That, Flux fam, is inflation.
The technical definition is rise in the prices of goods and services that households buy. I.e. the cost of our groceries, clothes, furniture, and even the houses themselves.
Prices generally increase over the years, but when they decrease, this is called deflation.
We know now that inflation measures the change in the price of a good or service. So if school books cost $100 in 2015, and today they cost $103, then prices have inflated 3%.
But that doesn’t tell us how prices have inflated across the board.
The most common measurement of inflation is the Consumer Price Index (CPI), which measures the change in the price of a basket of household goods and services.
The Australian Bureau of Statistics picks what’s in the basket based on how Aussies are spending their money, and they calculate CPI every quarter.
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