what does 7.9% inflation mean? Is that the percentage the currency loses during one month?
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Currency’s purpose is to hold value for future goods or services. You go to work and they pay you in cash, then you go somewhere else and buy something. In the time between when you get paid the money, and you use the money, the amount of stuff the money can buy can change.
You don’t really work for money, you work for the things money buys, to facilitate that, we invented money.
But we can’t really measure this directly very easily, so we use a proxy. The price difference between a basket of goods today and a basket of goods at some period in the past like a month or a year. In this case, the basket of goods today is 7.9% higher than it was in the past period.
What causes it is still up for debate. The communists think it’s corporate greed. The keynesians think it’s cost push or demand pull. The monetarists think it’s the money supply. The Austrians know it’s government interference.
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