The average inflation rate measures real upward price movements in goods and services in the economy. Inflation rates are typically tracked, measured, and reported on quarterly and annually. The inflation rate fluctuates considerably from year to year. There have been times in the United States when the average inflation rate has reached relatively high levels. In the late 1970’s, for example, inflation rates peaked an annual rate of about 23%. That means that average prices increased by almost 25% in a single year. Obviously, inflation rates at such an extreme level have significant negative economic consequences. The average inflation rate over the past decade or so has been in the 2-4% range. The Federal Reserve has been quite successful in keeping inflation in check by adjusting the Federal Funds Rate, which ultimately impacts interest rates and the pace of economic activity. Inflation generally occurs during periods of high economic growth, although it can also be caused by other factors, such as a lack of adequate supply of key resources, such as oil.