Article on Inflation And Their Types For Banking Examination

Article on Inflation And Their Types For Banking Examination

Dear Readers This Topic is very much important for all the banking aspirants of IBPS,SBI,RBI,NABARD examination. Read it minutely and ask questions related to it in comment box.

Inflation-Inflation is a persistent increase in the general price level of goods and services in an economy over a period of time. In India for inflation measurement Base year is 2004-05.

Types of Inflation-
1. Demand pull inflation
2. Cost push Inflation
3. wages Inflation
4. Imported Inflation

Demand Pull Inflation- occurs demand for goods and services exceed the supply.

Cost Push Inflation- Price increase due to increase in price of other products.

Wages Inflation- It occur due to increase in wages as a result purchasing power of people increase.

Imported Inflation- The general price level rises in a country because of the rise in prices of imported commodities.

Categories of Inflation Creeping Inflation- When there is a general rise in prices at very low rates, which is usually between 2-4 percent annually.

Walking Inflation - This type of strong, or pernicious, inflation is between 3-10% a year. It is
harmful to the economy because it heats up economic growth too fast.

Galloping Inflation- When inflation rises to ten percent or greater, it wreaks absolute havoc on
the economy. Money loses value so fast that business and employee income can’t keep up with
costs and prices.

Hyper Inflation- Hyperinflation is when the prices skyrocket more than 50% — a month. It is
fortunately very rare.

Inflation Related Terms

1. Deflation- Deflation is the opposite of inflation — it’s when prices fall. It is caused by a reduction
in the supply of money or credit .

2. Hyperinflation- Extremely rapid or out of control inflation. Hyper inflation is a situation where
the price increases are so out of control that the concept of inflation is meaningless.

3. Stagflation- A condition of slow economic growth and relatively high unemployment- a time of
stagnation- accompanied by a rise in rises , or inflation.

4. Disinflation- A slowing in the rate of price inflation. Disinflation is used to describe instances
when the inflation rate has reduced marginally over the short term. It is used to describe periods of
slow inflation.

5. Reflation- Reflation is the act of stimulating the economy by increasing the money supply or by
reducing taxes. it is opposite of disinflation.


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