inflation

What is inflation
Inflation is the continued growth and general price of goods and services and productive factors in an economy over time. Other definitions explain how the persistent upwardmovement in the general level of prices and declining purchasing power of money.

Inflation is the continued growth and general price of goods and services and productive factors in an economy over time.

In practice, the evolution of inflation is measured by the change in the Consumer PriceIndex (CPI). To understand the phenomenon of inflation, one must distinguish betweengeneralized price increases that occur once and forever, those price increases that arepersistent over time. Within the latter can also make a distinction regarding the degree of magnification. There are countries where inflation is controlled under 10% annualaverage inflation that others do not exceed 20% annually and countries in which pricegrowth has exceeded 100% annually. When the price variation reaches 50% a month is called hyperinflation.

nflation, as an economic phenomenon has causes and effects. The definition of its causes is not a simple matter because the general increase in prices often becomes a circular complex mechanism of which is not easy to determine the factors driving the price increase. This difficulty in determining the causes of inflation, has been the driving force behind a number of different test theoretical explanations of the inflationary processes. Explanatory theories generally fall into three categories. On one side are those who consider inflation as an explanation of excess aggregate demand, or demand-pull inflation. On the other hand, are those that aim to aggregate supply as a trigger for inflation, this is what is called cost-push inflation. Finally, there is a group of theorists who understand inflation as the result of social rigidities, this is what is called core inflation.