What term describes the ongoing rise in the average level of prices for goods and services over time?

The term that describes the ongoing rise in the average level of prices for goods and services over time is inflation. Inflation reflects a decrease in the purchasing power of money, meaning that as prices increase, each unit of currency buys fewer goods and services than it did before. This phenomenon is typically measured by indices such as the Consumer Price Index (CPI) and the Producer Price Index (PPI), which track price changes over a specific period.

Understanding inflation is crucial for analyzing economic health, as moderate inflation is often associated with a growing economy, while high inflation can erode savings and create uncertainty for consumers and businesses. Conversely, deflation, which refers to a general decrease in prices, stagnation, indicating a lack of growth or activity, and depreciation, which typically pertains to a decline in the value of an asset or currency, do not describe the upward trend in prices characteristic of inflation.