Inflation rates are often reported in the media and interpreted differently by various people. The purpose of the study was to explore mathematical literacy teachers' written responses to questions based on the concept of percentage increase and inflation. The participants were a group of 59 in-service South African teachers who were enrolled on a course to help them to teach the subject mathematical literacy. The findings show that 95% of the teachers could carry out a percentage increase calculation without any difficulties, but only 37% could correctly work out a two-step calculation using the inflation rate figures. Across all the items, there were only eight teachers (14%) who showed evidence of engagement with all the contextual constraints embedded in the inflation concept. Teachers exhibited poor covariational reasoning with respect to the changes in the inflation rates and changes in the price of goods. The study suggests that opportunities for the development of covariational reasoning should be promoted.