Inflation is an important economic indicator that measures the rate at which the prices of goods and services rise over time. It is a key factor in determining how the economy is performing and how it can impact the cost of living for individuals and businesses. Inflation is typically measured by comparing the Consumer Price Index (CPI) to the inflation rate over a specific period of time. Other methods of measuring inflation include the Producer Price Index (PPI) and the labor cost index. The Federal Reserve Board also uses a variety of measures to assess the inflation rate. By understanding how inflation is measured, individuals and businesses can better plan for the future and adjust their spending accordingly.