INFLATION

WHAT IS INFLATION ?

AN INCREASE IN THE SUPPLY OF

MONEY RELATIVE TO THE
AVAILABILITY OF GOODS AND
SERVICES, RESULTING IN HIGHER
PRICES AND DECREASE
IN THE PURCHASING POWER
OF MONEY.

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 FACTORS OF
INFLATION
 INCREASE IN MONEY SUPPLY
 DECREASE IN DEMAND FOR MONEY
 DECREASE IN THE AGGREGATE
SUPPLY OF GOODS AND SERVICES
 INCREASE IN THE AGGREGATE
DEMAND FOR MONEY

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TYPES OF INFLATION

 DEMAND-PULL INFLATION
 COST-PUSH INFLATION
 BUILT- IN INFLATION*

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DEMAND-PULL
INFLATION
FACTORS:
-INCREASES IN GOVERNMENT
PURCHASES
-INCREASES IN THE MONEY SUPPLY
-INCREASES IN THE PRICE LEVEL IN
THE REST OF THE WORD

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COST-PUSH INFLATION

FACTORS:
-AN INCREASE IN THE PRICES OF RAW
MATERIALS
-AN INCREASE IN WAGE RATES

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BUILT-IN INFLATION

THE TYPE OF INFLATION THAT

RESULTS FROM PAST EVENTS
AND PERSISTS IN THE PRESENT.

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HOW TO MEASURE
INFLATION?
 CONSUMER PRICE INDEX (CPI)
 PRODUCER PRICE INDEX (PPI)

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 INFLATION &
ECONOMY

 UNEMPLOYMENT
(LOWER UNEMPLOYMENT - HIGHER INFLATION)

 INVESTMENTS

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Inflation
Sept: CPI at 1.8%, RPI down to 3.9%

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 BIBLIOGRAPHY:
 www.statistics.gov.uk/cci/nugget.asp?id=19
 http://www.investorwords.com/2452/inflation.html
 http://www.investorwords.com/
 http://inflationdata.com/Inflation/Inflation_Articles/Defin
http://inflationdata.com/Inflation/Inflation_Articles/Defi
 http://en.wikipedia.org/wiki/Inflation

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