Inflation and ways to reduce it. Types and forms of inflation. Depending on the rate of price growth, moderate (creeping), galloping and hyperinflation are distinguished Depending on creeping moderate

Inflation (lat. Inflatio - bloating) is the process of reducing the value of money, as a result of which a smaller amount of goods and services can be bought for the same amount of money after a while. In practice, this translates into higher prices.

Inflation is the overflow of financial channels with paper money, which leads to their depreciation.

Inflation is a monetary phenomenon, but it is not limited to the depreciation of money. It pervades all spheres. economic life and begins to destroy these spheres. The state, production suffers from it, financial market but it is the people who suffer the most.

Depending on the growth rate, there are:

Creeping (moderate) inflation(Price growth less than 10% per year). Western economists consider it as an element of the normal development of the economy, since, in their opinion, insignificant inflation (accompanied by a corresponding increase money supply) is able, under certain conditions, to stimulate the development of production, the modernization of its structure. The growth of the money supply accelerates the payment turnover, reduces the cost of loans, contributes to the activation investment activity and growth in production. The growth of production, in turn, leads to the restoration of equilibrium between the commodity and money supply at a higher price level. Average level inflation across EU countries last years amounted to 3-3.5%. At the same time, there is always the danger that creeping inflation will get out of control. state control. It is especially high in countries where there are no well-established mechanisms for regulating economic activity, and the level of production is low and is 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. Predominates in developing countries;

Hyperinflation(prices are rising at an astronomical rate, reaching several thousand percent per year, or over 100% per month). Paralyzes the economic mechanism, with it there is a transition to barter exchange. It is also characteristic of countries in certain periods when they are experiencing a radical break in their economic structure.

Also use the expression chronic inflation for long-term inflation. Stagflation is a situation where inflation is accompanied by a decline in production (stagnation).

A characteristic feature of galloping inflation compared to moderate is that it increases the risks associated with the conclusion of contracts at nominal prices. In this regard, when concluding transactions, either price increases are taken into account, or instead of national currency stable convertible currency another state. For example, in Russia, during a period of runaway inflation, prices for goods and services were often quoted in US dollars. Unlike moderate, galloping inflation is difficult to control. Galloping inflation affects the behavior of households and firms, inflation expectations play a big role. Each price increase leads to an increase wages and costs.

Consequences of runaway inflation:

inflation expectations;

the desire to convert money into goods and real estate in order to save funds from depreciation;

refusal to provide loans with a fixed interest.

Hyperinflation is distinguished into a separate type, since it means the almost complete collapse of commodity- monetary circulation And financial system countries due to the loss of confidence in the money of market participants. Money is losing its natural role in the economy as a measure of value, a means of circulation, a means of accumulation, a means of payment.

The period of hyperinflation always means a crisis in the state, the collapse of the financial system. Hyperinflation may be accompanied by a default on state debts, mass bankruptcies, maximum magnification barter and refusal to use money, the impoverishment of the population due to the lack of the ability to save.

In the course of hyperinflation, as in Russia during the Civil War, or Germany in the early 1920s, money circulation may give way altogether. barter. Liquid goods begin to act as equivalents, the intrinsic value of which does not depend on public policy: freely convertible currency, precious metals, some goods (vodka, cigarettes, sugar). The result could be dollarization of the economy when foreign currency(most often during the 20th century and before the global crisis of 2008 it was the US dollar) is widely used for transactions within the country or individual industries, up to the complete replacement of the national currency.

Governments are thought to be the cause of hyperinflation, due to covering public spending by issuing (issuing) new money, thereby undermining the confidence of the population in their currency. Banknotes are losing their value, and the population is trying to get rid of them as quickly as possible.

Distinguish between open and suppressed inflation. The first is manifested in the rise in prices, the second - in the disappearance of goods.

Exist modern theories inflation, allowing to determine its types: open inflation and suppressed inflation. Open inflation is characterized by macroeconomic disequilibrium towards demand, in which the real value of money falls. . Types of open inflation:

Demand-pull inflation - generated by excess aggregate demand compared to the actual production volume. (Product shortage)

Supply (cost) inflation - means an increase in prices caused by an increase in production costs in conditions of underutilized production resources. An increase in unit costs reduces the volume of products offered by producers at the current price level.

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

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

Forecast inflation is inflation that is factored into the expectations and behavior of economic agents.

Unpredictable inflation - becomes a surprise for the population, as the actual growth rate of the price level exceeds the expected one.

Adapted consumer expectations - a phenomenon associated with the deformation of consumer psychology. Over the increased demand for goods allows entrepreneurs to raise prices for goods. (Demand creates supply).

Suppressed inflation characterized by external price stability (with active state intervention), but an increase in the shortage of goods, which also reduces the real value of money. The mechanism of suppressed inflation is associated with the inevitable emergence of a gap between administratively established and higher market prices. A deficit appears, buyers in search of the right product overpay merchants. Begins movement of masses of goods from the official economy to the shadow.

57. Inflation of demand and inflation of costs. Analysis of inflation using the equation MV=PY.

1. Demand inflation- is generated by an excess of aggregate demand compared to the real volume of production. (Product shortage)

Commodity deficit is the quantity of a good that buyers cannot buy at the prevailing market price. A shortage indicates a mismatch between supply and demand and the absence of a balancing price.

2. Supply inflation (costs ) - means an increase in prices caused by an increase in production costs in conditions of underutilized production resources. An increase in unit costs reduces the volume of products offered by producers at the current price level.

Creeping inflation is determined by insignificant rates of price growth - less than 10% per year. The second name for this type of inflation is regulated, because. the government, using a variety of tools, can influence market conditions, keeps money circulation under control. In such a situation, money retains its value, since purchasing power remains relatively stable. Creeping inflation usually does not have a serious negative impact on the economy.

Galloping inflation is characterized by relatively rapidly depreciation of money. The price growth index for this type of inflation is 20-200% per year. Because of this, there is an increase in demand, and therefore acts as additional factor price increases.

Hyperinflation is characterized by astronomical rates of price growth, sometimes reaching several thousand percent a year. Under such conditions, the gap between rising prices and rising wages becomes catastrophic. The well-being of even the most affluent segments of the population is deteriorating. Hyperinflation indicates that the economy is close to collapse, about the uncontrollability of economic processes.

Stagflation characterizes the development of inflationary processes under conditions economic downturn and the depressed state of the economy. Stagflation is a new phenomenon associated with cyclical development national economy and due to new conditions for the reproduction of capital and structural changes in the national economy.

According to the degree of equilibrium of price growth, balanced and unbalanced inflation are distinguished. With balanced inflation, the dynamics of prices in various sectors relative to each other is unchanged, and with unbalanced inflation, the growth rates of prices in various sectors are constantly changing in various proportions.

In terms of predictability, inflation is classified into expected and unexpected. Unexpected or predictable factors significantly affect the consequences of inflation.

There are two types of inflation:

open inflation;

suppressed inflation.

inflation is an increase in the prices of goods and factors of production. But inflation does not mean an increase in prices in equal proportion and simultaneously for all goods. That is why price indices are used to measure inflation or determine its absence. To measure open inflation, several indicators are used: Paasche index, inflation index consumer prices and the gross deflator domestic product(GDP).
General index prices

The Paasche index is calculated by the formula:

where h is the price growth index for one year; , - prices for the same products, but expressed respectively in the prices of the base and current years; - output volume this product in the current year.

The following formula is used to measure the inflation rate:

where - the growth rate of the average level of consumer prices; CPI i is the consumer price index of the year under study (i=1, 2, …, n); CPI 0 is the consumer price index in the base year.

The consumer price index is calculated by comparing the cost of a certain set (basket) of goods in the year under study with the cost of the same basket of goods in the base year:

where CPI is the consumer price index; W 0 is the cost of a basket of consumer goods in the base year; W i is the cost of a basket of consumer goods in the year under study.

Having considered the essence of inflation, its types and measurement indicators, we will analyze the causes that cause inflationary processes. Among them, first of all, we should mention the lack of a well-thought-out long-term monetary policy, designed to keep the commodity and money markets in a balanced state and allow short-term anti-inflationary measures to be taken. Consequences of inflation

Declining standard of living

Devaluation of savings

Increasing taxation

Inflation- an increase in the general level of prices for goods and services. With inflation, for the same amount of money, after some time, it will be possible to buy fewer goods and services 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.

Causes of inflation.

V economics There are the following causes of inflation:

1. An increase in government spending, to finance which the state resorts to money emission, that is, it increases the money supply in excess of the needs of commodity circulation. It is most pronounced in war and crisis periods.
2. Excessive expansion of the money supply through mass lending, and financial resource for lending, it is taken not from savings, but from emissions of unsecured currency.
3. The monopoly of large firms on the determination of prices and their own production costs, especially in the primary industries.
4. The monopoly of trade unions, which limits the ability of the market mechanism to determine the level of wages acceptable to the economy.
5. Reduction in real volume national production, which, with a stable level of money supply, leads to an increase in prices, since a smaller amount of goods and services corresponds to the same amount of money.

Types of inflation.

Depending on the growth rate, there are:

1. creeping(moderate) inflation(Price growth less than 10% per year). Western economists consider 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 capable, under certain conditions, of stimulating the development of production and the modernization of its structure.
2. Galloping inflation(annual price increase from 10 to 50%). Dangerous for the economy, requires urgent anti-inflationary measures. prevails in developing countries.
3. 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 excess amount of banknotes to cover the budget deficit. Paralyzes the economic mechanism, with it there is a transition to barter exchange. Usually occurs during war or crisis periods.

Also use the expression chronic inflation for long-term inflation.

The opposite process of inflation is deflation - a decrease in the general level of prices. V modern economy rare and short-term, usually seasonal.

Consequences of inflation.

1. Redistribution of monetary resources in favor of individuals.

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

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

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

During a special strong inflation, as for example in Russia during the Civil War, or Germany in the 1920s. the circulation of money may give way altogether to barter in kind.

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

The opposite process is deflation - a decrease in the general price level (negative growth). In the modern economy, it is rare and short-term, usually seasonal. For example, grain prices tend to decline immediately after harvest.

The term "inflation" appeared in the second half of the 19th century, having migrated from the arsenal of medicine. Literally translated from Latin, inflation means "bloating", i.e., the overflow of channels of circulation with excess paper money, not supported by a corresponding increase in the mass of commodities.

Inflation is a phenomenon of violation of monetary circulation and is associated with various monetary factors: the issue of signs of value, the volume of the money supply, the speed of money turnover, the amount of mutually repaying payments.

Obviously, inflation is a process due to the interaction of two factors - pricing and money. On the one hand, the depreciation of money is a process associated with rising prices, on the other hand, a fall in the purchasing power of money can also occur under the influence of changes in their quantity in circulation.

Causes of inflation:

1. The growth of public spending, to finance which the state resorts to money emission, increasing the money supply in excess of the needs of commodity circulation. It is most pronounced in war and crisis periods.

   Excessive expansion of the money supply through mass lending;

   The monopoly of large firms on the determination of prices and their own production costs, especially in the primary industries;

   The monopoly of trade unions, which limits the ability of the market mechanism to determine the level of wages acceptable to the economy;

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

2. Forms and manifestations of inflation

1. Depending on the growth rate, there are:

creeping(moderate) inflation(Price growth less than 10% per year). Western economists consider 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 capable, under certain conditions, of stimulating the development of production and the modernization of its structure. The growth of the money supply speeds up the payment turnover, reduces the cost of loans, promotes the intensification of investment activity and the growth of production. The growth of production, in turn, leads to the restoration of equilibrium between the commodity and money supply at a higher price level. The average inflation rate in the EU countries in recent years has amounted to 3-3.5%. At the same time, there is always the danger that creeping inflation will get out of state control. It is especially high in countries where there are no well-established mechanisms for regulating economic activity, and the level of production is low and is 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. Predominant in developing countries;

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

demand inflation;

supply inflation;

With demand inflation, the imbalance between aggregate demand and supply arises from the side of aggregate demand. This type of inflation occurs when the purchasing power of the population does not have commodity coverage.

The mechanism of unwinding inflationary demand is characterized by the fact that the money supply first increases, and then aggregate demand.

Supply inflation occurs as a result of contraction aggregate supply due to an increase in the cost of production by 1 unit.

The increase in costs is due to the monopoly of enterprises, the actions of trade unions, the use of imported resources, administrative regulation, etc. At the same time, the mechanism of inflation unwinding is characterized by the fact that initially, because of the growth of costs, prices increase, and then the money supply expands.

Inflation can exist in two forms:

1) open - i.e. explicit price increase;

2) hidden or suppressed - its manifestations are that the rise in prices is due to a shortage of goods, and the rise in price is hidden only on the black market.

3. Patterns of the inflationary processThere are three stages in the development of inflation.1.1 . At the first stage of inflation, the rate of depreciation of money lags behind the rate of growth of the money supply in circulation. This is explained primarily by a certain increase in the circulation needs for money as a result of the artificial revival of production under the conditions of the war boom, the contraction of credit and the slowdown in the velocity of money circulation. At this stage of the inflationary process, the share premium of the state grows, a significant part of which is appropriated by the monopolies. It is characteristic mainly of the inflationary conjuncture during the years of the pre-war militarization of the economy and during the war until the growth of unproductive state spending leads to a breakdown in the economy, a decrease in the growth rate, and subsequently to a reduction in output. The rate of depreciation of money lagging behind the rate of growth of the money supply can persist throughout the war if the state introduces strict regulation (“freezing” of prices and rationed distribution of products).

1.2 . In the second stage of inflation, the rate of depreciation of money overtakes the rate of growth of the money supply in circulation. The reason for this is the growing disproportion between the volume of money circulation and the real needs of circulation in money. A similar ratio is observed in a period when inflation is not able to stimulate the growth of production and trade or prevent the reduction of their volume, and the mechanism of state price regulation is absent or is ineffective. The depreciation of money causes distrust of them. The flight from money begins, i.e., the desire to turn them into real values ​​- goods as soon as possible. An increase in the velocity of money further reduces the need for circulation in money and, along with an increase in the money supply, increases inflation. At this stage, the state may completely lose control over inflation, and then the rate of emission is controlled by a spontaneous mechanism of depreciation of money. With high rates of price growth, “money hunger” sets in, as the state does not have time to print money; various surrogates appear.

1.3. The third stage of inflation is characterized by an intermittent relationship between the rate of issue and the rate of depreciation of money. Similar phenomena are observed during the peaceful development of the economy under the conditions of the general crisis of capitalism, especially at its present stage, when inflation has become the object of state-monopoly regulation. The rate of the average annual depreciation of money either outpaces the growth rate of the money supply in circulation, or lags behind. The third stage of the inflationary process is characteristic of the so-called creeping inflation.

Inflation- it price increase for goods and services directly related to purchasing power society (that is, over time, the same amount of money can buy less and less goods). Inflation should not be confused with a term such as " price jump”because it has a longer and more stable nature, as well as its influence is even across all groups of goods and services, although some of them may not be subject to inflation.

The opposite term is deflation, that is, a price decrease is a rather rare phenomenon in the modern economy, most often of a seasonal nature: for example, a gradual decrease in the price of greens, radishes, cucumbers by mid-summer, and then prices rise again.

Causes of inflation.

In economics, there are seven main causes of inflation:

1. An increase in government spending, the financing of which causes an increase in the money supply (the inclusion of a "printing press") in excess of the needs of commodity circulation. This cause is most noticeable during periods economic crisis or war.
2. Mass lending, also provoking an increase in the money supply.
3. Monopoly large companies on price setting (especially in the resource-extracting industries).
4. The monopoly of trade unions in determining the level of wages.
5. Reducing the volume of production (the same amount of money in the country corresponds to a smaller amount of a production good, that is, more money per item).
6. Depreciation of the national currency (especially when in large numbers imports into the country).
7. Growth of taxes, duties, excises at a more or less stable level money supply.

Types of inflation.

1. Demand-pull inflation (or shortage of a good) is when the demand for a good exceeds the supply.
2. Supply inflation is an increase in production costs ( costs) causes a decrease in output.
3. Balanced inflation - all prices rise evenly, regardless of the type of product.
4. Unbalanced inflation is an uneven rise in prices for various goods and services.
5. Projected inflation is an expected phenomenon in the light of the state's economic development.
6. Unpredictable - the most unpleasant kind, since the population may even be in a panic from such a sharp and unexpected rise in prices.
7. Consumer expectation inflation is a type of inflation that occurs when rumors of impending price increases force manufacturers to raise prices in advance, even in the absence of an economic crisis.

Three more types of inflation depend on the rate of its growth:

1. moderate, or creeping inflation - the slowest type, considered by some economists as the normal development of the economy (in their opinion, such inflation only stimulates the development of the state economy if it does not exceed 10% per year). However, there is always the danger of this type of transition to the next type of inflation.
2. Galloping inflation - prevails in developing countries, and is dangerous for the economy of the state. With it, price increases can range from 10 to 50% per year.
3. Hyperinflation is a terrible phenomenon in the economy: price increases can reach hundreds and even thousands of percent per year. As a result of a huge budget deficit, an excessive amount of banknotes is issued, which paralyzes economic activity states.

Consequences of inflation.

1. Difference cash reserves(reserves of the National Bank) and cash flows, which provokes the depreciation of cash reserves and securities.
2. Spontaneous redistribution of income (sellers, creditors, exporters and budget organizations, but buyers, debtors, importers and workers in the real sector win).
3. Majority Distortion economic indicators(profitability, GDP, etc.).
4. Depreciation of the national currency.

anti-inflation policy.

Anti-inflation policy- is a collection government measures to regulate the economy by suppressing inflation.

Types of anti-inflationary policy:

1. Deflationary policy - the policy of demand regulation through credit and tax mechanisms: reducing government spending, increasing interest rates for credit, limiting the money supply. The downside is that this type of policy leads to a decrease in economic growth.
2. Income policy - controlling both prices and wages by setting their limits. The downside is that it can cause public discontent. The second option is external loans, which leads to an increase in public debt.
3. Indexation policy - indexation of pensions, scholarships, salaries. Indexing is less efficient than the previous two options.
4. Stimulating the expansion of production and the growth of savings of the population is the most difficult, but the most effective method.

When studying the concepts of inflation and purchasing power, one can mention such an interesting concept as the Big Mac Index - a way to determine purchasing power. This standard sandwich from McDonald's acts as an indicator of the real exchange rate of the national currency, purchasing power, and also the security of the population, because its price in different countries unequal and directly depends on what was listed. According to 2015 data, a Big Mac costs $1.2 in Ukraine, $1.36 in Russia, $4.8 in the US, and $7.54 in Switzerland.