, Inflation
.
Inflation :
❖ Inflation, at its core, represents a sustained increase in the general
services within
an economy over a defined period.
❖ This fundamental concept signifies more than just isolated price hik
trend of
increasing costs across a broad spectrum of the economy, and its con
defining
characteristic.
❖ Consequently, this general rise in prices directly leads to a reduction
money.
As the overall price level increases, each unit of currency can buy fewe
could
previously.
❖ This erosion of purchasing power is a primary concern for individua
directly
impacts the standard of living and economic stability.
1. Types of Inflation
➢ Creeping Inflation : Creeping inflation refers to a mild increase in th
and
services, typically below 3-5% annually.
It is considered ideal for developed economies as it reflects a stabl
environment.
This type of inflation helps to encourage spending and investment w
financial instability.
➢ Walking Inflation : Walking inflation is a moderate form of inflation w
rate of
5-10% annually.
While it is still manageable, it can begin to affect the purchasing po
concerns if it persists.
Economies experiencing walking inflation may see a slowdown in g
➢ Galloping Inflation : Galloping inflation occurs when the inflation rat
annually.
This level of inflation can destabilize the economy as it leads to unc
purchasing
power significantly.
If not controlled, it can negatively impact investment, savings, and e
➢ Hyperinflation : Hyperinflation refers to an extremely high and typic
inflation,
often exceeding 50% per month.
This leads to the complete breakdown of a currency's value. People
currency,
and small denominations of money become worthless.
The most famous example of hyperinflation occurred in Zimbabwe
the Zimbabwean dollar lost its value at an alarming rate.
2. Causes of Inflation
.
Inflation :
❖ Inflation, at its core, represents a sustained increase in the general
services within
an economy over a defined period.
❖ This fundamental concept signifies more than just isolated price hik
trend of
increasing costs across a broad spectrum of the economy, and its con
defining
characteristic.
❖ Consequently, this general rise in prices directly leads to a reduction
money.
As the overall price level increases, each unit of currency can buy fewe
could
previously.
❖ This erosion of purchasing power is a primary concern for individua
directly
impacts the standard of living and economic stability.
1. Types of Inflation
➢ Creeping Inflation : Creeping inflation refers to a mild increase in th
and
services, typically below 3-5% annually.
It is considered ideal for developed economies as it reflects a stabl
environment.
This type of inflation helps to encourage spending and investment w
financial instability.
➢ Walking Inflation : Walking inflation is a moderate form of inflation w
rate of
5-10% annually.
While it is still manageable, it can begin to affect the purchasing po
concerns if it persists.
Economies experiencing walking inflation may see a slowdown in g
➢ Galloping Inflation : Galloping inflation occurs when the inflation rat
annually.
This level of inflation can destabilize the economy as it leads to unc
purchasing
power significantly.
If not controlled, it can negatively impact investment, savings, and e
➢ Hyperinflation : Hyperinflation refers to an extremely high and typic
inflation,
often exceeding 50% per month.
This leads to the complete breakdown of a currency's value. People
currency,
and small denominations of money become worthless.
The most famous example of hyperinflation occurred in Zimbabwe
the Zimbabwean dollar lost its value at an alarming rate.
2. Causes of Inflation
