We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Part Of. Understanding Inflation. Types of Inflation. What Does Inflation Impact? Understanding Hyperinflation. Understanding CPI. Related Terms A-I. Related Terms J-Z. Economics Macroeconomics. Table of Contents Expand. Stagflation and Hyperinflation. Negative Inflation. What Causes Inflation? Keynesian Economics. Monetarist Economics.
It's All About the Money. The Bottom Line. Key Takeaways Inflation is the rate at which the overall level of prices for various goods and services in an economy rises over a period of time. As a result, money loses value because it no longer buys as much as it did in previous times; the purchasing power of a country's currency declines.
Hyperinflation is a period of fast-rising inflation; stagflation is a period of spiking inflation plus slow economic growth and high unemployment.
Deflation is when prices drop significantly, due to too large a money supply or a slump in consumer spending; lower costs mean companies earn less and may institute layoffs. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts.
We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear.
Investopedia does not include all offers available in the marketplace. Related Articles. Macroeconomics Stagflation in the s. Partner Links. In case the price of say only one commodity rise sharply but prices of other commodities fall, it will not be termed as inflation.
Similarly, in case due to rumors if the price of a commodity rise during the day itself, it will not be termed as inflation. What are different types of inflation :. Broadly speaking inflation is divided into two categoires i. Demand inflation occurs when supply cannot expand any more to meet demand; that is, when critical production factors are being fully utilized, also called Demand inflation.
In general, there are three factors that could contribute to Cost-Push inflation: rising wages, increases in corporate taxes, and imported inflation. Deflation is the opposite of inflation. Deflation refers to situation, where there is decline in general price levels. Deflation increases the real value of money and allows one to buy more goods with the same amount of money over time.
Deflation can occur owing to reduction in the supply of money or credit. Deflation can also occur due to direct contractions in spending, either in the form of a reduction in government spending, personal spending or investment spending.
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