Inflation is the economic phenomenon where the purchasing power of the currency declines over a given period. The inflation rate for a year is the percentage fall in the currencyʼs purchasing power for the given year. A rise in the price level for a selected group of products and services is calculated to arrive at the inflation rate. Thus price rise and inflation are synonymous – as prices rise the currency loses its value and you end up buying lesser goods and services for the same amount of money.