In general it happens when demand for products and services by consumers is stronger than the supply of the desired products and services. For example, in the current world economy, developing countries like China and India are demanding more materials to support their growth--oil, building materials, copper, etc. That extra demand causes the prices of those items to rise because there is limited supply. And many of those items are required to operate manufacturing plants and other consumer services so prices of other items goes up as well--e.g., cereal, UPS shipping, gas.
when consumers have more disposable income (a+)
When goods or services in general cost less in the deflated currency than previously.
If people expect inflation, they are more inclined to spend than save money which will lose its value. A surge in demand will cause an an increase in prices (because demand exceeds supply) and voila! Inflation.
Paul Krugman, a columnist with The New York Times, has published an article that promotes the view that inflation should be allowed to occur. High inflation, he states, promotes spending over saving, and reduces the real value of any debts.
Pricing Power InflationPricing power inflation is more often called administered price inflation. This type of inflation occurs when the business houses and industries decide to increase the prices of their respective goods and services to increase their profit margins. Pricing power inflation does not occur at the time of financial crises and economic depression or when there is a downturn in the economy. This type of inflation is also called oligopolistic inflation because oligopolies have the power of pricing their goods and services at whatever levels they want.
Deflation is decrease in general price level of services and goods. Deflation occur when inflation rate is 0%
A low supply of goos and a widespread demand
a low supply of goods and widespread demand
When goods or services in general cost less in the deflated currency than previously.
If people expect inflation, they are more inclined to spend than save money which will lose its value. A surge in demand will cause an an increase in prices (because demand exceeds supply) and voila! Inflation.
James Bullard has written: 'Did the great inflation occur despite policymaker commitment to a Taylor rule?' -- subject(s): Industrial productivity, Inflation (Finance)
Paul Krugman, a columnist with The New York Times, has published an article that promotes the view that inflation should be allowed to occur. High inflation, he states, promotes spending over saving, and reduces the real value of any debts.
Pricing Power InflationPricing power inflation is more often called administered price inflation. This type of inflation occurs when the business houses and industries decide to increase the prices of their respective goods and services to increase their profit margins. Pricing power inflation does not occur at the time of financial crises and economic depression or when there is a downturn in the economy. This type of inflation is also called oligopolistic inflation because oligopolies have the power of pricing their goods and services at whatever levels they want.
the limited supply of goods caused prices to rise.
the limited supply of goods caused prices to rise.
Deflation is decrease in general price level of services and goods. Deflation occur when inflation rate is 0%
Economic inflation or just inflation is the rate at which the general level of prices for goods and services is rising. Central banks attempt to stop severe inflation, along with severe deflation, in an attempt to keep the excessive growth of prices to a minimum. Inflation or deflation will always occur in a economy but the role of the Fed is to make less severe.
inflation