# Does the inflation rate reflect only the change in quantity of money?

Does inflation rate during the years comes from the the proportional difference of current amount of currency and amount of currency 1 year ago.

I mean lets suppose in 2000 there were 1 million dollars in flow and in 2001 100k were added into the flow, so the inflation rate is 11%?

• Following policies may affect the inflation too, e.g. if interest rates increase a few percent of the extra money supplies, it may "curb" the liquidity of the money available, hence, reduce the inflation rates. If nothing is done, then money supplies will be the direct causation for inflation. Dec 12, 2016 at 11:16