Inflation occurs when prices rise beyond what many consider to be the real value of goods and services. Experts usually observe this when the money supply in a particular country grows at a high rate. One of the most influential factors predicting inflation in an economy is the consumer price index. When prices of food, houses and commodities rise sharply, economists start pointing to these surging prices as indicators that the inflation rate is also soaring.

Business owners in particular carefully watch inflation rates. They believe inflation slows down investment and causes a demand for higher wages. Experts also blame inflation for a slump in trade since the prices of goods on the international market rise higher, causing exported products to become more expensive. Because inflation has the ability to considerably impact your own business operations, invest some extra time scrutinizing this significant market phenomenon:

1. Find dependable inflation data experts and government agencies publish.

2. Survey timely market commentaries that inflation experts publish online.

3. Learn how the experts calculate inflation rates.

Action Steps
The best contacts and resources to help you get it done

Get reliable and up to date inflation information

Before you can decide how inflation may affect your business, you'll need to get the latest inflation data from sources you can trust.

I recommend: Annual Inflation is published by InflationData.com, based in Virginia, which has been publishing timely inflation data charts on the Internet since 2003. In addition to providing annual inflation rates, InflationData.com also provides average annual inflation by decade, current and historical inflation rates and even an inflation rate calculator. The Federal Reserve monetary policy reporting publications also contain the most recent inflation data and forecasts.

Seek inflation advice from well-known, authoritative sources

Considering the diverse opinions that well-known economists and market watchers provide in published commentaries gets you the help with inflation you need to make better and more informed decisions. It's like having your own inflation consultant on the payroll.

I recommend: MarketWatch presents online commentary from leading economics experts relating to the impact of current inflation rates on the money scene. Get insightful opinions from the most published names in economics on the RealClearMarkets.com website. Search by topics on inflation from conservative and liberal minded money watchers for up to date reports.

Start your own inflation training so you can calculate individualized inflation rates

If you're a sole practitioner or even a business owner managing his own staff, chances are you can't afford to hire an inflation expert who can give you a play by play analysis of how inflation affects your operations. You can train yourself to calculate inflation and judge its impact, both short and long term.

I recommend: How Do I Calculate the Inflation Rate? takes you step by step through the calculation process. It also identifies the factors you’ll put into the equation. Inflation in the USA is a blog dedicated to analyzing economics factors like unemployment, inflation and stock market indices. The web site shows you how to figure an individual inflation rate using certain expenditures.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Inflation remains one of those controversial subjects in economics. Not only do experts in the subject disagree on how inflation affects monetary policy, they also disagree on the proper definition of inflation.