FIGURE 1-2: The Inflation Rate in the U.S. Economy The inflation rate measures the percentage change in the average level of prices from the year before. When the inflation rate is above zero, prices are rising. When it is below zero, prices are falling. If the inflation rate declines but remains positive, prices are rising but at a slower rate.

Note: The inflation rate is measured here using the GDP deflator.
Data from: U.S. Department of Commerce, Economic History Association