Inflation & Purchasing Power
Inflation is a sustained rise in the general price level — and its mirror image, declining purchasing power, is the reason money sitting idle quietly loses value over time, even if never spent. This guide explains how inflation is measured in India (CPI, recently rebased to 2024 with 358 items, as the primary policy measure, vs WPI; and the headline-vs-core debate), the two broad causes (demand-pull and cost-push), and India’s flexible inflation-targeting framework — the 4% CPI target with a 2–6% tolerance band, managed via the Monetary Policy Committee’s repo rate decisions, and just renewed in March 2026 for the period through March 2031. We also revisit the real-vs-nominal distinction from tackl.finance’s foundations series, and cover deflation — the less-discussed opposite of inflation, and why central banks target a small positive rate rather than zero.