February 18, 2019

Inflation and types of inflation

Here we explain about inflation and its types-

 Inflation: inflation is the sustained increased in the general price level of goods and services in an economy over the period of time. In inflation demand increases, supply decreases, flow of money increases, value of money decreases, prices increases. 

Stages of inflation:  Creeping (0 to 3)% , Walking (3 to 7)%, Tortling (6 to 7)%, Running (7 to 10)%, Galloping (10 to 20)%, Hyperinflation ( more than 20 %).
 Types of Inflation:  

Demand Pull Inflation: To much money buy to few goods- When the demand of goods and services is going faster than supply then prices will increases this generally happen.

Cost Push inflation: When Companies cost go up due to increase the prices of Raw material wages or any other factor they need to increase prices to maintain their profit margin. 

Measurement of inflation:  inflation= (current year prices -bayear prices)×100÷base year price .  WPI- base year 2004-5,  number of articles- 676.   CPI: base year 2011-12,  number of article -1200+.  Full name wpi- wholesale price index.     Full name of cpi- consumer price index. 

Term Related to Inflation: 

Deflation: Just opposite situation of inflation- demand decreases, flow of money decreases, supply of money increases, value of money increases, prices decreases.  

Disinflation: A slowing in the rate of prices of inflation is called disinflation. 

 Skew inflation: combination of inflation and deflation .    

Stagflation: it is combination of rassison and unemployment .  

Core Inflation: When inflation happened it core sector economy due to this overall economy get affected.  Here we given all sector of core sector-  Coal,crude oil, natural gas,refinery products, Fertilizer, Cement, steel,electricity. 

Bottleneck Inflation: When supply falls rapidly and the demand remain at the same level .   

 Agflation: inflation in agricultural field.

Hyperinflation: out of control inflation.                                      

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