Explained: What is inflation and how is it measured? Explained: What is inflation and how is it measured? The gradual increase in the cost of goods and services is known as inflation. A nation's economy is in danger when inflationary forces are present, but deflation, also known as negative inflation is a much more dangerous problem. Sayali Kotwal / Friday, July 29, 2022 / Article rating: 4.8 The gradual increase in the cost of goods and services is known as inflation. A nation's economy is in danger when inflationary forces are present, but deflation, also known as negative inflation is a much more dangerous problem.