Types of Inflation
1. How many types of inflation are there?
There are 3 types of inflation:
- Demand-Pull Inflation
- Cost-Push Inflation
- Built-in Inflation
2. What is Cost-push inflation?
Cost-push inflation occurs when the overall price level in an economy is driven higher by increases in the cost of production for goods and services. In other words, the inflationary pressure comes from the supply side of the economy, primarily due to rising production costs.
Types of Inflation
Inflation can be simply defined as a decline in the value of a currency. Inflation directly affects the prices of essential goods and services. Also, it helps in calculating the increase in the price of certain goods and services in the past years. Inflation can be experienced when it requires more money to buy the same amount of goods. For example, if a pack of biscuits weighing 50 grams costs Rs. 5/Nos. in the year 2021 and the same pack of biscuits costs Rs. 8 in the year 2022 then it can be said that there is inflation. When a unit of currency can buy less than usual then it can be said that the nation is going through inflation. Inflation is measured in percentages, and the current rate of annual inflation in April of 2022 in India is 7.79%. Deflation is a state in which the prices of goods and services begin to fall with an increase in the value of the currency.
Read, What is Inflation
Table of Content
- Inflation and its Impact
- Types of Inflation
- How is Inflation Measured?
- Advantages and Disadvantages of Inflation
- Steps Adopted by the GOI to Tackle Inflation in India