Types of Inflation
Inflation can be broadly divided into three categories depending on its range of increase:
- Low Inflation is inflation which is slow and predictable. It is gradual and takes place over a longer period.
- Galloping Inflation is very high inflation. It usually runs into double-digit numbers.
- Hyperinflation is a large and accelerating form of inflation. In this kind of inflation, not only do the prices shoot up very high, but they do so in a very short period.
Effects of Inflation on the Economy
Effects of Inflation on the Economy: Inflation is the sustained rise in prices of goods and services over time. This leads to the erosion of purchasing power. Purchasing power is the value of a currency expressed in terms of the number of goods and services that can be bought by one unit of the currency.
During periods of rising prices, uneven inflation acts like a hidden tax, hitting certain groups disproportionately. This loss of buying power, particularly for those already struggling, is the most concerning consequence of inflation.
In this article, we will read about Inflation and mainly the effects of inflation on the economy. We will also discuss the types and causes of inflation.
Table of Content
- What is Inflation?
- Types of Inflation
- Causes of Inflation
- Effects of Inflation on the Economy
- Effects of Inflation on the Indian Economy