[ɪnˈfleɪʃən əˈkaʊntɪŋ]
Definition: is measuring inflation through measuring the increase of price and through the growth rates of prices in percent. Inflation in many cases significantly affects the magnitude of the effectiveness of the investment project, the conditions for financial feasibility, the need for financing and the effectiveness of equity participation in the project. This influence is especially noticeable for projects with a time-consuming investment cycle (for example, in the extractive industry) that requires a significant share of borrowed funds and is realized with simultaneous use of several currencies (multicurrency projects). Therefore, in assessing the effectiveness of inflation should be taken into account.
Inflation accounting in a sentence:
- In the ideal case, inflation accounting should be maintained for each product participating in the project.
- For inflation accounting, price indices are used, ie, relative indicators, characteristic rates of price growth.
Synonyms and related words: inflation, increase in prices, depreciation of the national currency
