​​What is Inflation? What are different types of Inflation?


Inflation is a general increase in prices and fall in the purchasing value of money. It is often measured by the Consumer Price Index (CPI), which tracks the prices of a basket of goods and services that are commonly purchased by households.


There are several types of inflation, each with its own characteristics:

Demand-pull Inflation: This occurs when the overall demand for goods and services in an economy exceeds the supply, leading to an increase in prices. It is often caused by factors such as increased consumer spending, rising wages, or government expansionary policies.

Cost-push Inflation: This occurs when the cost of producing goods and services increases, leading to higher prices. It can be caused by factors such as rising wages, higher raw material costs, or increased energy prices.

Built-in Inflation: This occurs when there is an expectation of future inflation, leading to wage and price increases in anticipation of higher costs. It can become self-perpetuating as higher wages and prices reinforce each other.

Deflation: This is the opposite of inflation, where there is a general decrease in prices and an increase in the purchasing value of money. It can be caused by factors such as reduced consumer demand, excess supply, or tight monetary policies.

Disinflation: This is a slowdown in the rate of inflation, where prices are still increasing but at a slower pace. It can be caused by factors such as tighter monetary policies, reduced government spending, or a decrease in economic growth.

Reflation: This is a deliberate policy to increase the inflation rate in an economy, often used to combat deflation or stimulate economic growth. It can be achieved through expansionary monetary and fiscal policies.

Greedflation: This is a term used to describe inflation that is caused by excessive corporate greed and profiteering, leading to higher prices for goods and services.

Lowflation: This is a term used to describe a low and stable rate of inflation, often considered to be beneficial for economic growth and stability.

Skew Inflation: This refers to a situation where the inflation rate is not uniform across different sectors or goods and services. For example, some sectors may experience higher inflation rates than others.

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