Definition
How much a dollar can actually buy.
The story
If prices rise 3% a year for 10 years, $100 at the end buys only about what $74 buys today. The bill in your wallet hasn't changed; what it can buy has. That's inflation seen from the other side.
Why markets watch it
Investors care about returns after inflation, because purchasing power is what money is really for.
See it in the story
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms