What is the term for a sustained increase in the price of goods and services?

The term for a sustained increase in the price of goods and services is inflation. Inflation occurs when there is a general rise in price levels across an economy, meaning that, on average, consumers have to spend more money to purchase the same basket of goods and services over time. This economic phenomenon often indicates a growing economy, but excessive inflation can lead to decreased purchasing power and economic uncertainty for consumers and businesses alike.

In contrast, deflation refers to a sustained decrease in prices, which can lead to reduced consumer spending and economic slowdown. A recession is defined as a significant decline in economic activity across an economy that lasts for an extended period, typically visible in GDP, income, employment, and industrial production. Stagnation describes a period of prolonged economic inactivity or slow growth, often characterized by high unemployment and stagnant demand. Understanding inflation is crucial as it can have broad implications for monetary policy, interest rates, and overall economic health.