Inflation is a symptom of economic imbalance and can have serious consequences. It often comes down to a clash between supply and demand. Supply describes how much of a good or service is available at a particular price, while demand is driven by the people who purchase it. If demand outpaces supply, inflation follows.

A popular measure of inflation is the Consumer Price Index (CPI), which represents the average monthly price change for a basket of goods and services consumed by households. The CPI includes prices of commodities like food grains, metals and fuels as well as services such as utilities and transport. A basket of products is used because the spending habits of individual households vary. For example, some might not need to drive a car or eat meat and so are less likely to be affected by changes in those areas of the economy.

The CPI is updated monthly and includes prices from a large number of different retailers. It also includes a sub-index for services to help get a more comprehensive view of the effects of inflation on consumers. Other measures of inflation exist, including the Producer Price Index (PPI), which includes goods and services at the wholesale level before they are sold to consumers.

When asked to name the most important cause of inflation, respondents indicated that government policies were a major driver. Within this category, people were most likely to name redistributive-type spending and tax cuts as key factors, while the actions of businesses were less popular. Perceived causes of inflation were divided along partisan lines, with Republican respondents more likely to blame the government and the Federal Reserve’s policies while blaming businesses less for the impact of inflation.