Inflation is the rate at which prices for goods and services increases. The Reserve Bank of Australia try to limit inflation and prevent deflation to ensure the economy runs effectively. The reason a schooner of beer cost $5 last year and is now $7, is due to inflation. This may be caused by small increases in the ingredients of the beer, or the rents charged to the venue owner, so they must increase their price to cover these costs. This generally upward trend in prices is the inflation.

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