Types of inflation and its essence

Inflation is something about which each of us knows notby hearsay. In a market economy, this phenomenon has become permanent in any country. Types of inflation depend on the reasons for which it occurs. But this is always a serious problem for the country and government. Therefore, we will analyze the essence of inflation and the reasons that cause it.

To start with a little terminology. Inflation is the depreciation of money, in connection with which there is a rise in prices for goods and services. It is important to note that such a rise in the price of goods is not due to an increase in their quality.

It can be said that inflation, the essence and types of depreciation are the presence of a large amount of money in circulation with fewer commodity values ​​that can be purchased.

But not everyone is getting inflation onlytroubles. It is beneficial to those who must repay the debt. The refund amount will be less valuable if it was taken without interest. The state, while paying social benefits and not recalculating them in connection with inflation, also remains in benefit. Another category in which price increases and depreciation of money is profitable are exporters.

Types and types of inflation are the following.

Inflation, created artificially (that is, there was an increase in prices, which can be controlled), is called administrative.

Sometimes there is a sharp increase in prices for goods. This can happen repeatedly and is called galloping inflation.

If too much depreciation occursmoney and, as a consequence, higher prices for goods and services, this event is called hyperinflation. This is a very negative manifestation, which affects the entire economy of the country, and especially the prosperity of its citizens.

The built-in inflation is more balanced. It is characterized by a gradual and not very high price increase for a certain period.

This process can affect a particularfactor or part of the production cycle. Inflation of costs is typical for rising prices for raw materials, materials and other production factors. As a result, the cost of production and services is growing. A natural reaction to such an event is an increase in prices for the final product.

The rate of inflation in one country is inextricably linkedwith the entire world economy. Types of inflation are almost always related to any events outside the state. In this case, imported inflation occurs. Its appearance is associated with a large amount of foreign capital, which enters the country or with an increase in the prices of imported products.

The economy is influenced by external environmental factors. If there is an increase in prices, then induced inflation occurs.

As a result of the large credit expansion, credit inflation takes place.

Usually many types of inflation can be predicted. But if the level of growth was much higher than expected, then such a case is called unforeseen inflation. Accordingly, if the rate of inflation has been within the forecast, it is called expected.

A very frequent cause of inflation is the rise in prices for goods and materials. In this case, it is called open.

If as a result of a shortage of goods occursartificial restraint of prices by the state, then latent inflation begins. Goods disappear from free sale and appear on the black market at inflated prices.

Gradual price increases over time are characteristic of creeping inflation.

And, finally, the excess of demand over supply, and, as a consequence, the increase in the cost of goods and services leads to demand inflation.

Thus, all types of inflation are characterized by price increases and depreciation of the money supply. They occur for various reasons and affect the economy to some extent.