Inflation

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

Types of Inflation

1. Demand pull inflation 
2. Cost push Inflation 
3. wages Inflation 
4. Imported Inflation 

• Demand Pull Inflation- occurs demand for goods and services exceed the supply. 
• Cost Push Inflation- Price increase due to increase in price of other products. 
• Wages Inflation- It occur due to increase in wages as a result purchasing power of people increase. 
• Imported Inflation- The general price level rises in a country because of the rise in prices of imported commodities. 

Categories of Inflation

1. Creeping Inflation- When there is a general rise in prices at very low rates, which is usually between 2-4 percent annually. 
2. 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. 
3. 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. 
4. Hyper Inflation- Hyperinflation is when the prices skyrocket more than 50% -- a month. It is fortunately very rare.