The economy produces many different goods and services and the price of each product evolves differently. Every year, some prices increase, while others decrease.

To measure the evolution of the average price, statistical authorities create 'baskets' of goods and services, which consist of the products that are usually purchased by some group of interest, e.g. households or businesses, and monitor the evolution of the price of this basket.

This creates indexes for consumer prices (the Consumer Price Index and the Harmonised Index of Consumer Prices), producer prices (the Producer Price Index for Industry and Services, and the Import Price Index for Industry), and real estate prices.

The inflation rate measures the rate of change of the Consumer Price Index which is the most commonly used price index.

The next graph shows the evolution of inflation since 1960.