9. Inflation is a general rise in the level of prices as measured by a price index. The average annual rate of inflation during the 1950s and into the mid-1960s was less than 2 percent. During the 1970s, the rate of inflation was much higher, averaging approximately 7 percent during the period. The rate of inflation in the 1970s for almost all Western nations was substantially higher than the rates during the 1950s and 1960s.