Neyrsluverðbólga

Neyrsluverðbólga, also known as consumer price inflation, refers to the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. It is a key economic indicator that measures the average change over time in the prices paid by households for a basket of consumer goods and services. This basket typically includes a wide range of items such as food, housing, transportation, healthcare, and entertainment, reflecting the spending patterns of the average consumer.

The calculation of neyrsluverðbólga is usually done by comparing the price of a representative basket of goods and services in the current period to its price in an earlier period. The most commonly used metric is the Consumer Price Index (CPI), which is compiled and published by national statistical agencies. Changes in the CPI are then expressed as a percentage to represent the inflation rate.

High neyrsluverðbólga can erode the purchasing power of individuals, meaning their money buys less than it did before. This can lead to a decrease in living standards if wages do not keep pace with rising prices. Central banks often aim to maintain a low and stable rate of neyrsluverðbólga, as moderate inflation is generally seen as a sign of a healthy economy. However, persistently high inflation can destabilize an economy and lead to uncertainty. Conversely, deflation, a sustained decrease in the general price level, can also be detrimental, potentially leading to delayed spending and economic stagnation.