InvestorQ : What are inflation and interest rates?
Nitin Shah made post

What are inflation and interest rates?

Rohan Bhadani answered.
2 years ago
Interest rates: An interest rate is defined as the proportion of an amount loaned which a lender charges as interest to the borrower, normally expressed as an annual percentage. It is the rate a bank or other lender charges to borrow its money or the rate a bank pays its savers for keeping money in an account.

Inflation: To explain this simply, inflation is the rate at which the cost of goods and services rises over time. It could also be thought of as a reduction in the value of a dollar because consumers are now able to purchase less than they previously could with the same amount of money. Don’t think of inflation in terms of higher prices for just one item or service, however. Inflation refers to the broad increase in prices across a sector or an industry, like the automotive or energy business—and ultimately a country’s entire economy.

In India, the Consumer price index (CPI) and Wholesale Price index (WPI) are commonly used indicators to gauge the level of inflation in the economy.