In this McKinsey Explainer, we answer the question what is inflation and examine the root causes, key metrics, and the overall impact on our society.
Inflation is the rise of prices across a basket of goods and services in a certain amount of time, usually a year. Learn more.
What is inflation? Inflationrefers to a sustained increase in the overall price of goods and services. The rate is measured annually. As the prices of goods and services increase, every dollar, pound, euro, or yen you carry buys a smaller proportion of a product or service....
10 Best 2025 Investments A rapidly changing AI industry and still-elevated inflation are among developments investors are facing this year. Kate StalterJan. 30, 2025 Oil Stocks Closely Tied to Crude Prices These oil stocks have the highest correlation to crude prices. ...
But, while indexes like the S&P 500 and Nasdaq 100 have comfortably outpaced inflation and rewarded investors over multiple decades, they have also weathered multiple stock market corrections. "A correction is when a broad measure of the market – the S&P 500, for example – declines at least...
That said, there area few things we’ve learnedabout recessions, according to McKinsey senior partner and McKinsey Global Institute chairSven Smit. The market imbalances that cause recessions can be caused by geopolitics, economic cycles, and many other forces. The financial sector is always involved...
While the price of oil has historically correlated with inflation, that relationship has become less pronounced since the 1970s. The loosening of this correlation is likely a result of the growth of the service sector which uses energy less intensively than manufacturing. Since oil is a key input...
When inflation occurs, money loses its purchasing power. This can occur across any sector or throughout an entire economy. The expectation of inflation itself can further sustain the devaluation of money. Workers may demand higher wages and businesses may charge higher prices, in anticipation of ...
Inflation is a rise in prices, which can be translated as the decline ofpurchasing powerover time. The rate at which purchasing power drops can be reflected in the average price increase of abasket of selected goodsand services over some period of time. The rise in prices, which is often ...
Inflation in consumer prices is measured and tracked so that problems in the economy can be pinpointed. If the rate of inflation is outpacing the rate of income growth, the economy is in trouble. Inflation can be negative, too; this is calleddeflation, but it is relatively rare. ...