{"id":1395,"date":"2021-04-28T01:23:32","date_gmt":"2021-04-28T01:23:32","guid":{"rendered":"https:\/\/enorcerna.com\/wiki\/what-is\/inflation\/"},"modified":"2021-04-28T01:23:32","modified_gmt":"2021-04-28T01:23:32","slug":"inflation","status":"publish","type":"post","link":"https:\/\/enorcerna.com\/wiki\/what-is\/inflation\/","title":{"rendered":"Inflation"},"content":{"rendered":"
\n

What is inflation?<\/h2>\n

Inflation consists of general and sustained increase in the prices of goods and services in an economy. <\/strong><\/p>\n

The term comes from the Latin word inflatio,<\/strong> <\/em>which refers to the action of inflating.<\/p>\n

Inflation generates a loss in the purchasing power of a population, therefore it causes negative effects on the economy<\/strong> and the inhabitants of a nation.<\/p>\n

Causes and consequences of inflation<\/h2>\n

Causes<\/h3>\n

The main causes of inflation are the following:<\/p>\n

    \n
  • Demand: <\/strong>When demand increases but the productive sector is not in a position to face the increase, prices rise.<\/li>\n
  • Costs:<\/strong> When production costs increase, be it due to a devaluation, economic crisis or other reason, producers are forced to increase prices to maintain their profit.<\/li>\n
  • Social causes or structural inflation: <\/strong>When it is warned about price increases in the future, it is possible that producers decide to anticipate them by raising the prices of their products.<\/li>\n<\/ul>\n

    Consequences<\/h3>\n

    The most notable consequence of inflation is that the loss or fall of purchasing power<\/strong>. This causes that, with the same amount of capital or money as before, fewer goods and services are obtained.<\/p>\n

    In this way, inflation generates economic crisis <\/strong>Y pessimism in the population, <\/strong>as obtaining products becomes increasingly difficult.<\/p>\n

    Definitely, the higher the inflation, the less the money or capital will be worth.<\/strong><\/p>\n

    How is inflation measured?<\/h2>\n
    \"Formula<\/p>\n

    Formula to calculate inflation.<\/p>\n<\/div>\n

    To measure inflation the Consumer Price Index (CPI) is used.<\/strong><\/p>\n

    The CPI it reflects the percentage increase in the basket of goods and services in the usual acquisition.<\/strong> In addition, it is used to calculate the real wage index and, in some cases, measure the deflation of the national accounts.<\/p>\n

    To build a CPI a survey is conducted about family expenses, <\/strong>from a meaningful model of the entire population.<\/p>\n

    The objective of this survey is to know the circumstances of family life:<\/strong> determine the quantities, services and items that are consumed, in order to calculate the current price of the family basket.<\/strong><\/p>\n

    To this basic basket calculated it is divided by the base year to compare<\/strong> and it is multiplied by 100, <\/strong>and from this result the CPI is obtained.<\/p>\n

    Types of inflation<\/h2>\n

    exist 3 types<\/strong> inflation: moderate, galloping or hyperinflation<\/strong>.<\/p>\n

    Moderate inflation<\/h3>\n

    Is occurs when the increase in prices happens gradually<\/strong>Therefore, the proportion that expresses it is low and, therefore, the price relationship remains fairly stable.<\/p>\n

    As long as it remains in these terms, moderate inflation is not considered a problem<\/strong> for the economy.<\/p>\n

    Runaway inflation<\/h3>\n

    This happens when prices increase 2 to 3 digits in a year.<\/strong> For example 15%, 20%, 25% per year, and so on progressively.<\/p>\n

    This type of inflation can have serious consequences for the economy of a country if measures are not taken in time.<\/p>\n

    Hyperinflation<\/h3>\n

    Hyperinflation is superior to rampant inflation, as it consists of hundreds or thousands of hundreds of annual increase. In this way, hyperinflation is about a serious economic crisis.<\/strong><\/p>\n

    According to economists and several international organizations, when inflation exceeds 50% monthly or 100% annually, it is considered hyperinflation<\/strong>.<\/p>\n<\/div>\n\n\n

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    What is inflation? Inflation consists of general and sustained increase in the…<\/p>\n","protected":false},"author":1,"featured_media":1396,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-1395","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-what-is"],"_links":{"self":[{"href":"https:\/\/enorcerna.com\/wiki\/wp-json\/wp\/v2\/posts\/1395","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/enorcerna.com\/wiki\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/enorcerna.com\/wiki\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/enorcerna.com\/wiki\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/enorcerna.com\/wiki\/wp-json\/wp\/v2\/comments?post=1395"}],"version-history":[{"count":0,"href":"https:\/\/enorcerna.com\/wiki\/wp-json\/wp\/v2\/posts\/1395\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enorcerna.com\/wiki\/wp-json\/wp\/v2\/media\/1396"}],"wp:attachment":[{"href":"https:\/\/enorcerna.com\/wiki\/wp-json\/wp\/v2\/media?parent=1395"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enorcerna.com\/wiki\/wp-json\/wp\/v2\/categories?post=1395"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enorcerna.com\/wiki\/wp-json\/wp\/v2\/tags?post=1395"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}