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Inflation is according to the classical definition an increase in the money supply.

In the 20th century the meaning of inflation is most commonly used to describe an increase in consumer prices (caused by an increase in the money supply). However this latter definition is confusing, especially for the needs of Bitcoin and Cryptocurrencies, since it is easy to measure money supply, whereas consumer prices can only at best be estimated. Mainstream economics does this through statistical indices such as the CPI which aggregate average prices of a basket of representative goods intended to be similar to the recurring expenses of average consumers. Changes in methodology, political influences and changes in consumer behavior however make such statistics increasingly problematic. A change in the composition of the basket used can yield very different CPI estimations.

See also