To many people, “inflation” is a dirty word.

It means higher prices at the store and higher interest rates at the bank or auto dealer. The basic rule of inflation is that prices rise when too much money chases too few goods.

Yet the Federal Reserve, which can control the nation’s money supply, likes two percent inflation. That rate shows a growing economy in which business is trying to keep up with demand. Along the way, that effort can create more jobs and, as a result, more demand.

The neat trick is to keep inflation from getting out of hand. If prices and interest rates increase too rapidly, the economy can slow down. The mismatch between supply and demand becomes too great until the slowdown helps restore a more manageable balance.

For several years, the inflation rate has been at or below the Fed’s target. But it has climbed in recent months and some market experts believe it will stay high. They watch to see what…

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