Measuring inflation. Moderate and galloping inflation

Inflation- an increase in the general level of prices for goods and services. With inflation for the same amount of money, over time, fewer goods and services can be bought than before. In this case, they say that over the past time the purchasing power of money has decreased, money has depreciated - it has lost part of its real value.

Inflation reasons.

In economics, the following causes of inflation are distinguished:

Height government spending, for the financing of which the state resorts to money issue, that is, it increases the money supply in excess of the needs of commodity circulation. It is most pronounced during periods of war and crisis.
Excessive expansion money supply due to mass lending, and financial resource for lending, it is taken not from savings, but from the issue of unsecured currency.
Monopoly of large firms to determine prices and their own production costs, especially in the raw materials industries.
Monopoly of trade unions, which limits the ability of the market mechanism to determine the level of wages acceptable to the economy.
Reduction of the real volume of national production, which, with a stable level of money supply, leads to an increase in prices, since the previous amount of money corresponds to a smaller volume of goods and services.

Types of inflation.

Depending on the growth rate, there are:

Creeping(moderate) inflation(price growth less than 10% per year). Western economists regard it as an element of the normal development of the economy, since, in their opinion, insignificant inflation (accompanied by a corresponding increase in the money supply) is able, under certain conditions, to stimulate the development of production, the modernization of its structure.
Galloping inflation(annual price increase from 10 to 50%). Dangerous for the economy, requires urgent anti-inflationary measures. Dominated in developing countries.
Hyperinflation(prices are growing at an astronomical rate, reaching several thousand and even tens of thousands of percent per year). It arises due to the fact that the government issues an excessive amount of banknotes to cover the budget deficit. It paralyzes the economic mechanism, with it there is a transition to barter exchange. Usually occurs during periods of war or crisis.

The expression is also used chronic inflation for long-term inflation.

The opposite process of inflation is deflation - a decline in the general price level. In the modern economy, it is rare and short-term, usually seasonal.

The consequences of inflation.

1. Redistribution of monetary resources in favor of individuals.

2. Violation of normal socio-economic relations in the country.

Lenders, savers, entrepreneurs and people with fixed income suffer from inflation.

The government, borrowers and people with non-fixed income gain from inflation.

During particularly strong inflation, such as in Russia during the Civil War, or Germany in the 1920s. money turnover may generally give way to natural exchange.

Inflation is the rise in prices for goods and services. With inflation, depreciation occurs of money, the purchasing power of the population decreases. The reverse process of inflation, that is, a decline in prices, is called deflation.

Types of inflation

In the economic literature, there are two types of inflation - supply and demand.

Demand inflation occurs when the monetary incomes of the population and firms grow faster than the real volume of goods and services. A similar situation on the market can be caused, firstly, by the state - through unpredictable military and social orders, and secondly, by entrepreneurs who artificially increase the demand for goods.

In such conditions, the economy will be close to full employment and workload. production facilities... The growth of incomes of the population, firms and the state will contribute to an increase in aggregate demand, and hence the rise in prices.

Inflation of supply is an increase in prices due to an increase in production costs in conditions of shortage of production resources, and, consequently, a decrease in aggregate supply. The main reasons for the increase in costs are the increase in nominal wages and prices for raw materials and electricity.

Types of inflation

Uneven growth in prices for product groups gives rise to inequality in profit rates, stimulates the outflow of resources from one sector of the economy to another (in Russia, from industry and agriculture to trade and the financial and banking sector).

Inflation types:

Demand inflation is generated by an excess of aggregate demand in comparison with the real volume of production (shortage of goods).

Inflation of supply (costs) - the rise in prices is caused by an increase in production costs in conditions of underutilized production resources. The increase in unit costs reduces the volume of products offered by manufacturers at the current price level.

Balanced inflation - the prices of various goods remain unchanged relative to each other.

Unbalanced inflation - the prices of different goods change in relation to each other in different proportions.

Forecasted inflation is inflation that is taken into account in the expectations and behavior of economic agents.

Unpredictable inflation - comes as a surprise to the population, since the actual rate of growth of the price level exceeds the expected one.

Adapted Consumer Expectations - Changing Consumer Psychology. Often arises from the dissemination of information about future potential inflation. The increased demand for goods allows entrepreneurs to raise the prices of these goods.

Suppression of inflation is characterized by external price stability with active government intervention. An administrative ban on price increases usually results in a growing shortage of those goods for which prices should have risen without government intervention, not only because of the initial increased demand, but also as a result of a decrease in supply. Government subsidies for producer or consumer price differentials do not reduce supply, but further stimulate demand.

Depending on the growth rate, there are:

Creeping(moderate) inflation(price growth less than 10% per year). Western economists regard it as an element of the normal development of the economy, since, in their opinion, insignificant inflation (accompanied by a corresponding increase in the money supply) can, under certain conditions, stimulate the development of production and the modernization of its structure. The growth of the money supply accelerates the payment turnover, cheapens loans, promotes investment activity and production growth. Production growth, in turn, leads to the restoration of equilibrium between the commodity and money supply at more high level prices. Average inflation rate by country The EU per last years amounted to 3-3.5%. At the same time, there is always a danger of creeping inflation going out of state control. It is especially high in countries where there are no proven regulatory mechanisms economic activity, and the level of production is low and characterized by the presence of structural imbalances;

Galloping inflation (annual price increase from 10 to 50%). Dangerous for the economy, requires urgent anti-inflationary measures. Dominated in developing countries;

Hyperinflation

(prices are growing at an astronomical rate, reaching several thousand and even tens of thousands of percent per year). Occurs due to the fact that to cover budget deficit the government issues an excessive amount of banknotes. Paralyzes the economic mechanism, with it there is a transition to barter exchange. Usually occurs during periods of war or crisis.

The expression is also used chronic inflation for long-term inflation. Stagflation call a situation when inflation is accompanied by a drop in production (stagnation).

Inflation reasons

In economics, the following causes of inflation are distinguished:

The growth of government spending, for the financing of which the government resorts to monetary emissions, increasing the money supply in excess of the needs of commodity circulation. It is most pronounced during periods of war and crisis.

Superplanned expansion of the money supply due to mass lending (see. Banking multiplier);

Monopoly large firms to identify prices and own production costs, especially in the raw materials industries;

Monopoly trade unions, which limits the ability of the market mechanism to determine an acceptable level for the economy wages;

Reduction of the real volume of national production, which, with a stable level of money supply, leads to an increase in prices, since the previous amount of money corresponds to a smaller volume of goods and services.

During particularly strong inflation, such as in Of Russia during Civil War, or Of Germany 1920s money circulation can generally give way natural exchange.

For modern economies in which the role of money is played commitments not having their own cost (fiat money), insignificant inflation is considered the norm and is usually at the level of several percent per year. Inflation tends to increase slightly at the end of the year, when both the level of consumption of goods by households and the level of corporate spending increase.

Inflation consequences:

1) a decrease in real income (especially for people with a fixed income);

2) depreciation of deposits;

3) inflation harms creditors;

4) inflation causes nervousness in people, social tension in society (for example, inflation in Germany in the 1920s is a factor in Hitler's coming to power);

5) inflation makes planning difficult even in the short term, which negatively affects production volumes;

6) inflation disrupts the inflationary process, and hyperinflation destroys it, since it devalues savings, it is impossible to acquire new equipment, expand production.

Socio-economic consequences of inflation:

1 Redistributive costs of inflation.

Inflation makes debtors rich, creditors lose. Incomes are redistributed in favor of :

a) monopoly enterprises;

b) financial structures;

c) the shadow economy;

d) individuals, when, for example, managers set their own wages.

Lose income:

a) people with fixed income;

b) creditors;

c) people who have deposits in banks.

2 Inflation tax – occurs when the government finances the deficit state budget by increasing the money supply:

IT = R * C + D (P-i),

where P is the rate of inflation;

С - cash;

D - deposits (deposits in banks);

i - interest rate on deposits.

3 Decrease in real income.

It can be thought of as the difference between nominal income and price increases:

"RD = DN -" R.

Another metric that is used to measure the change in real income is the Real Income Index:

IРД = IDN / Icen,

where ІРД is the real income index;

ІДН - index of nominal income;

Icen - price index.

4 Uncertainty Created by Inflation in relation to future prices, since the future value of money is unpredictable.

5 Inflation breeds social conflict; leads to bankruptcy of banks, enterprises, to strikes. Landmarks in economic activity are lost; it is difficult to accumulate; money ceases to fulfill its functions.

6 Inflationary expectations – these are the prevailing ideas in society about what the upcoming inflation rates will be.

Those who manage to increase their income at a faster rate benefit from inflation:

1 Commercial banks, currency sellers, trade enterprises. The growth in prices and incomes for these structures is greater than the growth in costs.

2 Borrowers - can repay the lender with less purchasing power.

3 A government that borrows money.

Anti-inflationary policy is a set of government regulation measures aimed at controlling the inflation rate.

There are two known ways to eliminate inflation: a) radical; b) adaptation (adjustment to inflation).

Anti-inflationary government policy can be shaped by either Keynesian or neoclassical theoretical views.

Keynesian approach: active budgetary policy- changes in government spending and taxes in order to influence effective demand. With excess demand, the government limits its spending and raises taxes. As a result, demand is falling, and inflation is falling. But at the same time, the growth of production is limited, which causes an increase in unemployment. The rise in unemployment causes a decrease in demand and now it is necessary to stimulate the purchasing power of entrepreneurs and consumers. If demand is insufficient, fiscal policy moves in the opposite direction: government investment in production increases and taxes fall. All these measures increase demand, but, at the same time, cause inflation to rise. With this approach, the government is forced to constantly balance between inflation and unemployment.

Neoclassical approach prescribes monetary regulation, which indirectly and flexibly affects the economic situation. The country's central bank is implementing deflationary measures by limiting the amount of money in circulation.

Monetary reform- changes carried out by the state in the field of monetary circulation, as a rule, aimed at strengthening the monetary system.

Allocate the following types monetary reform:

Going from one cash equivalent to another- for example, the transition from copper money to silver in Ancient Rome, or the transition from bimetallism to monometallism in most European countries at the end of the XIX - beginning of the XX century

Replacement of banknotes(banknotes and coins) that became defective (and / or a devalued coin) a full-fledged coin or irredeemable bargaining chips (for example, in 1695 in Great Britain all old coins that had lost their original weight were withdrawn to re-mint them into new, full-value ones; Russia as a result reforms of 1839-1843 passed from paper money-assignments to credit tickets exchanged for silver);

Currency stabilization or partial measures to streamline monetary circulation through devaluation, denomination, revaluation, etc .;

Formation of a new monetary system - carried out during the period of disintegration, the acquisition of independence by the former colonies, the formation of states, etc.

1. Creeping inflation - expressed in a gradual long-term rise in prices, when the average annual rate of increase in prices is 5-10% (normal inflation). Stimulates entrepreneurial activity.

2. Galloping inflation - inflation in the form of an abrupt rise in prices, when the average annual rate of increase in prices is from 10 to 200%.

3. Hyperinflation - inflation with a very high rates price increases when price increases exceed 200% per year. The IMF takes a 50% rise in prices per month for hyperinflation.

Inflation is typical for paper money because state can easily re-print paper money to cover his expenses. If inflation exceeds 10% per year, it has a detrimental effect on the economy. undermines investment incentives. Investment commodity prices rise faster than the time it takes to master capital investment... Money depreciates and realizes investment project impossible. During this period, speculative business grows.

Inflation reasons. Economists distinguish between two main types of inflation.

1. Demand inflation. HELL> than AS. There is more money than Goods → inflation growth. (The economy sometimes tries to spend more than it is capable of producing. The business sector is unable to respond to this excess demand by increasing real output, since all available resources are already fully used. This excess demand leads to an increase in prices for constant real output and causes demand inflation).

The relationship between BP, on the one hand, and the volume of production, employment and price levels, on the other, is not so simple. Rice. 2. Price levels and employment will help us figure this out. (see Fig. 5 curve АS from topic No. 12).

Segment 1. Nominal GDP and real GDP grow at the same rate, the price level is constant. Aggregate expenditures (C + Ig + G + Xn) are so small that the volume of nominal GDP lags far behind its maximum level achieved at full employment of resources (potential GDP). Unemployment is high and most of the production capacity is idle. AD → to AS (GDP) → unemployment rate ↓, and the level of prices for products and resources (salary) does not grow (or grows, but not significantly) due to the prevailing circumstances.

Segment 2. Nominal GDP is growing faster than real GDP. Therefore, the former must be deflated in order to determine the real volume of production. Product and resource prices (wages) begin to rise even before full employment is reached. (АД → к AS (GDP) → unemployment rate ↓, and the level of prices for products and resources (wages) begin to grow even before full employment is achieved, since the amount of suitable resources in the economy is gradually decreasing and entrepreneurs are forced to use either less suitable resources whose productivity is lower, or compete with each other in attracting the required resources → to the price of resources (salary) → to production costs, ↓ PT → to product prices. Inflation arising in this segment is sometimes called premature inflation, because it begins before full employment is established in the economy.

Segment 3. Nominal GDP starts to grow rapidly, while real GDP does not grow → towards inflation. In this segment, firms are unable to respond to BP by increasing AS, since all resources in the economy are already involved. Real GDP = potential GDP, further AD → to prices. Inflation may start to rise at a high rate, since BP is much higher than AS.

2. Cost inflation, or supply inflation. It occurs when factors such as excessive salary increases and rapid increases in raw material prices increase production costs per unit. products → to ↓ profit and the volume of products that the company is ready to offer at the current price level → ↓ AS → to the price level. Consequently, according to this scheme, the growth of production costs pushes prices up, and not demand pulls them with it, as is the case with demand inflation. This type of inflation leads to stagflation - a simultaneous rise in inflation and unemployment amid a decline in production. The excess of average costs reduces the profits of firms, this leads to a decrease in output and a decline in AS.

The two main sources of cost inflation are nominal wages and prices for non-labor resources (raw materials, energy).

Inflation caused by rising wages. Source - trade unions.

Inflation caused by the disruption of the supply mechanism. The reason for the growth in production costs, and, consequently, in product prices, is a sudden increase in the cost of raw materials and energy carriers.

Demand inflation and cost inflation are interrelated. In practice, it is difficult to distinguish between them. The differences between them are as follows. Demand inflation continues as long as there is a surplus of aggregate spending. Cost inflation automatically limits itself, i.e. it gradually disappears. Due to the decrease in supply, real GDP and employment are reduced, and this prevents further increases in costs. In other words, cost inflation generates recession, and recession, in turn, constrains additional costs.

Structural inflation- arises in an economy in which some industries are constantly underproduction, i.e. a deficit arises → prices for these products rise → prices for products of other industries rise.

Imported inflation- inflation caused by external factors, for example, excessive inflows into the country foreign currency and higher import prices.

Credit inflation- inflation caused by excessive credit expansion.

According to the forms of manifestation, inflation is:

1. Open - occurs when the market price mechanism operates freely. Rising prices for consumer and investment goods. To forms open inflation demand inflation, cost inflation, structural inflation.

2. Latent (suppressed) inflation - typical for the administrative-command economy, where prices are controlled by the state. When inflation is suppressed, the market is always in short supply, and a shadow market appears. The entrepreneur loses the incentive to produce a quality product, they lack real information about the consumer's reaction to their product.

Recall that inflation is distinguished depending on the rate of price growth: creeping (moderate), galloping and hyperinflation.

Creeping inflation is characterized by the growth rate of prices by 10-20% per year.

Galloping inflation sets in when prices rise from 20 to 200% per year.

Hyperinflation is inflation with an average monthly price increase of more than 50%, and the annual growth rate is four digits.

With creeping inflation, the value of money is preserved, savings are profitable (provided that interest income above the rise in prices), the risk of concluding contracts at current prices is low, and the standard of living is declining slowly. Economic impact moderate inflation are the facts of increasing the dynamism of the economy. This is possible in the case of the presence of unused production factors and the availability of the provision of gains for stronger and more modern producers.

The negative consequences of creeping inflation include:

· Manifestation of the action of the so-called "inflation tax";

· Action of progressive taxation;

· Depreciation of tax revenues in the event of unforeseen inflation;

· Decrease in real incomes of the population, motives for work, depreciation of savings;

· "Costs of worn-out shoes", which are caused by more frequent withdrawals of money from bank accounts, which leads to additional losses of time;

· "Menu costs", characterized by updating price tags, catalogs, price lists, etc .;

· The impact of inflation on the country's balance of payments;

Galloping inflation is characterized by the fact that prices cease to objectively reflect the economic situation. In this regard, it is difficult to plan income and expenses. Savings are depreciated and become unprofitable. Banks do not run the risk of giving loans with a fixed interest rate and long-term loans... Inflation risk is high long-term investment... From the sphere of production, capital passes into the sphere of "short money" - the sphere of trade, speculative and financial business. At the same time, the processes of the so-called "escape from money" are activated; the desire of the population to save money at least by buying expensive goods, real estate, land, etc.

High inflation transforms economic growth, and at an average annual rate of more than 40%, economic growth in the country stops. Uncertainty of further development leads to a violation of forecasts for the development of economic sectors. The commodity shortage is aggravating, leading to a sharp decrease in expediency savings... This, in turn, disrupts the performance of the monetary system. Barter deals are reviving with greater intensity.

The depreciation of money within the country leads to their depreciation in relation to foreign currencies. Foreign currency, in turn, is more actively replacing the national currency. The deformation of the country's monetary system continues.

Hyperinflation has a destructive effect on money circulation, since the state loses control over the issue of money. Employment and national production are sharply declining. Money depreciates sharply. The printing press is working at full speed, throwing out more and more heaps of paper money.

Economic actors are trying to quickly get rid of the rapidly depreciating money. A condition is possible when the rate of turnover of money is many times lower than the rate of getting rid of rapidly depreciating money. This leads to the fact that the rate of growth of prices can sharply outstrip the rate of growth of the amount of money in circulation.

Inflation reasons

In practice, the following causes of inflation are distinguished:

1. Excessive expansion of the money supply due to mass lending. Wherein cash for lending, they are taken not from savings, but issued from the issue of unsecured currency. This occurs most noticeably during periods economic crisis or military action.

2. Growth of government spending, for the financing of which the state resorts to the emission of money, increasing the money supply (including the "printing press") in excess of the needs of commodity circulation.

3. Reduction of the real volume of national production, which, given a more or less stable level of money supply, leads to an increase in prices, since the same amount of money corresponds to a smaller volume of goods, works and services, that is, per unit of goods produced, works performed, services rendered more money.

4. Monopoly large companies on setting prices and determining their own production costs, especially in the resource-extracting industries and in the raw materials industries.

5. Monopoly of trade unions in determining the level of wages.

6. Growth of taxes, duties, excise taxes with a more or less stable level of money supply.

7. Decrease in rate national currency(especially with a large number import to the country).

Methods for measuring inflation

The most common method of measuring inflation is the index consumer prices, which is calculated in relation to the base period.

You can also measure inflation by calculating:

prices of manufacturing companies;

deflator of gross domestic product.

Note that consumer price indices are used as correction factors, for example, when calculating the amount of compensation, damage, and the like.

The general formula for the price index is as follows:

Price index = Market basket value in this year/ The value of the market basket in the base year.

Types of inflation

Depending on the rate (rate of flow) of inflation, the following types of inflation are distinguished:

Creeping (moderate) inflation. With such inflation, prices increase by no more than 10% per year. The value of money is saved, contracts are signed at nominal prices. Such inflation is considered to be the best, since inflation occurs due to the renewal of the assortment and allows adjusting prices due to changes in the conditions of supply and demand. This inflation is manageable because it can be regulated.

Galloping (spasmodic) inflation. With such inflation, prices rise from 10-20 to 50-200% per year. In concluded contracts, enterprises set the cost of their goods, products, works and services, taking into account the rise in prices. The population begins to actively invest their savings in material values... This kind of inflation is difficult to manage. The country often hosts monetary reforms... These changes indicate the presence of an economic crisis.

Hyperinflation. With such inflation, prices rise by more than 50% per month and more than 100% per year. The well-being of the population is sharply deteriorating. Economic relations between enterprises are destroyed. Such inflation is uncontrollable and requires extraordinary measures on the part of the state. As a result of hyperinflation, production stops, the sale of goods, products, works and services decreases, the real volume of national production decreases, unemployment rises, operating enterprises are closed, and companies take place.

Depending on the nature of the manifestation, the following types of inflation are distinguished:

Open inflation. With such inflation, the price level rises in conditions of free prices, not regulated by the state.

Suppressed (closed) inflation. With such inflation, there is an increase in the commodity deficit, in conditions of strict control over prices by the state.

Depending on the causes of inflation, there are:

Demand inflation;

Cost inflation;

Structural inflation.

Other types of inflation include:

Balanced inflation. With such inflation, the prices of different goods change to the same extent and simultaneously.

Unbalanced inflation. With this inflation, commodity prices rise unevenly.

Expected inflation. This inflation allows the government to take protective measures.

Unexpected inflation.

Imported inflation. Such inflation develops under the influence of external factors. Imported inflation is caused by an excessive inflow of foreign exchange into the country and an increase in import prices;

Exported inflation. Such inflation is transferred from one country to another through the mechanism of international economic relations, affecting money circulation, effective demand and prices.

Impact of inflation

Inflation can have both positive and negative impact on socio-economic processes.

TO positive consequences inflation includes the following points:

1. Inflation has a stimulating effect on trade, as the expectation of price increases in the future encourages consumers to buy goods today.

2. Inflation is a factor of "natural selection" economic evolution... In conditions of inflationary development of the economy, weak enterprises go bankrupt. Thus, in national economy only the strongest and most efficient enterprises remain to function. At the same time, inflation can contribute to the growth of the competitiveness of domestic goods.

3. In the economy with part-time employment, moderate inflation, while slightly reducing the real income of the population, makes it work harder and better.

4. Inflation redistributes income between lenders and borrowers, with borrowers winning. Having received a long-term loan at a fixed interest rate, the borrower will have to repay only part of it, since the real purchasing power of money will decrease due to inflation.

5. With inflation, debtors, buyers, importers, and workers in the real sector win.

The negative consequences of inflation include the following points:

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Measuring inflation. Moderate and galloping inflation

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