Inflation

The rate at which the general price level rises, measured as the change in a price index.

An index moving from 170.0 to 178.5 over a year represents 5% inflation.

Inflation matters to a company in three separate ways that are often blurred. It raises input costs, which compresses margin unless prices can follow. It raises nominal revenue, which flatters growth. And it raises the discount rate through the risk-free rate, which lowers the value of the same future cash flows.

A business with pricing power is largely indifferent to moderate inflation and a price taker isn't, so inflationary periods separate the two clearly.

Check whether the revenue growth in an inflationary year was volume or price.

Revenue and costs both go up, and so does the discount rate. That's three things moving at once, so pull them apart before you judge the year.