Creeping Inflation (Moderate Inflation)

  • Inflation is long-term moderate to moderately inflationary. This type of inflation, in which prices rise slowly, remains single digit. That is less than 102 per cent inflation. In such a situation, there will be no severe depressing consequences for the economy.

 For example, this has been the case in Sri Lanka since 2008.

 

 Galloping Inflation

  • Galloping inflation is a state of low-speed inflation. A situation where the annual inflation rate is in the range of two or three digits.

 E.g. 1. after the social transformation in Russia, such inflation was seen.

        2. Similar situations have arisen in Latin American countries, such as                                    Bolivia, Brazil, Argentina, and Nicaragua.


 

 Hyperinflation

  •  Pollution is a condition in which the general price level rises at an alarming rate. Here the inflation rate is four or more digits. Sometimes the rate of inflation can be in the millions of percent. Here the monthly inflation is as high as 50%. The main reason for the defilement is the rapid expansion of the money supply. Pollution has often been caused by the government printing banknotes to cover war expenses. In a nuclear war, the value of the currency can be very low and the currency can be devalued and transformed into a system of handing over the economy.

 E.g. 1. Hyperinflation in Venezuela since 2016. (2016 - Inflation to date 53,798.500%)

        2.  Hyperinflation in Zimbabwe during the reign of Robert Mugabe (2004 - 2009)  (In 2000, 231,000 000%)

        3. The post-World War (1920-23 period) Hyperinflation in Germany (where the price index rose from 1 to 10,000,000,000).

 

 Suppressed Inflation

  •  Suppressed inflation is a potential inflation that has been suppressed by the government and has not been allowed to break down.                                                   
  • Price controls, rations, minimum wages to control the rapid rise in prices of goods and services. The situation where the government intervenes and controls real inflation by using measures such as the suppression of black market is due to the intervention of the government, which is lower than the prevailing price level in the economy according to market forces.

 E.g. 1. Internal Operations that activated the Sri Lankan economy during the period                     1970-77 This was the situation in the closed economic policy.

        2. Germany strictly controlled prices during the post-World War II period due to the lessons learned from the unholy views faced after the First World War.

 

 Spiral inflation

 The average price level rises in a spiral. This happens for two main reasons.

 

·         In inflation, rising consumer prices lead to lower consumer power. Then, with the intervention of the unions, wages increase. At the same time, rising commodity costs and rising aggregate demand coincide with rising commodity prices. This process occurs as the process continues. This is also known as the Wage Price Spiral.

 

·         Business profits rise in inflation. Then the demand for the factor increases and the factor price increases. Accordingly, commodity prices increase and business revenue increases. If this continues to happen, a similar situation will arise.