Inflation is an economic phenomenon that occurs when there is a rise in prices or, said another way, when the purchasing power of a dollar declines over time. Inflation is expressed as a percentage calculated by the average price increase of selected goods and services over a chosen period. For example, as we noted above, the inflation percentage between June 2021 and June 2022 was 9.1%, meaning that prices rose by an average of that amount in one year, and the dollar experienced a consequent decrease in purchasing power. The opposite of inflation is deflation, which happens when purchasing power increases as prices decline.