Inflation

Inflation is a persistent increase in the general price level of goods and services in an economy over a period of time

In India for inflation measurement Base year is 2011-2012

Types of Inflation- 

1. Demand pull inflation 

2. Cost push Inflation 

3. wages Inflation 

4. Imported Inflation 

1. Demand Pull Inflation- occurs demand for goods and services exceed the supply.

2. Cost Push Inflation- Price increase due to increase in price of other products. 

3. Wages Inflation- It occur due to increase in wages as a result purchasing power of people increase. 

4. Imported Inflation- The general price level rises in a country because of the rise in prices of imported commodities.

Categories of Inflation- 

• Creeping Inflation- When there is a general rise in prices at very low rates, which is usually between 2-4 percent annually.

•  Walking Inflation - This type of strong, or pernicious, inflation is between 3-10% a year. It is harmful to the economy because it heats up economic growth too fast.

•  Galloping Inflation- When inflation rises to ten percent or greater, it wreaks absolute havoc on the economy. Money loses value so

fast that business and employee income can't keep up with costs and prices. 

• Hyper Inflation- Hyperinflation is when the prices skyrocket more than 50% -- a month. It is fortunately very rare.

Inflation Related Terms 

1. Deflation- Deflation is the opposite of inflation -- it's when prices fall. It is caused by a reduction in the supply of money or credit .

2. Hyperinflation- Extremely rapid or out of control inflation. Hyper inflation is a situation where the price increases are so out of control that the concept of inflation is meaningless. 

3. Stagflation- A condition of slow economic growth and relatively high unemployment- a time of stagnation- accompanied by a rise in rises , or inflation.

4. Disinflation- A slowing in the rate of price inflation. Disinflation is used to describe instances when the inflation rate has reduced marginally over the short term. It is used to describe periods of slow inflation.

5. Reflation- Reflation is the act of stimulating the economy by increasing the money supply or by reducing taxes. it is opposite of disinflation.

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