Inflation is measured as the growth of the money supply in an economy, without a commensurate increase in the supply of goods and services. This results in a rise in the general price level as measured against a standard level of purchasing power. There is a variety of inflation measures in use, related to different price indices, because different prices affect different people. Two widely known indices for which inflation rates are commonly reported are the Consumer Price Index (CPI), which measures nominal consumer prices, and the GDP deflator, which measures the nominal prices of goods and services produced by a given country or region.

Mainstream economists' views on the causes of inflation can be broadly divided into two camps: the "monetarists" who believe that monetary effects dominate all others in setting the rate of inflation, and the "Keynesians" who believe that the interaction of money, interest rates and output dominate other effects. Keynesians also tend to add a capital-goods (or asset) price inflation to the standard measure of consumption-goods inflation. Other theories, such as those of the Austrian school of economics, believe that inflation results when central-banking authorities increase the money supply (Monetary inflation).