I N F L AT I O N

PRESENTED BY SARVAJEET S PATEL

 Meaning of infl ation?

• Inflation is an economic concept.

• inflation means a state in which the value of money

is falling i.e.…..Price are rising.

• Inflation is the rise in the price of general

commodities over a period of time.

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 Defi nition of infl ation
‘A general and progressive increase in prices; in inflation
everything gets more valuable except money’.

• For example –
A movie ticket was for a few paise in my dad’s time. Now it
is worth Rs.100. My dads salary for the month was Rs.4000
and over the years it has now become Rs.75,000. This is
what inflation is, the price of everything goes up. Because
the price goes up, the salaries go up.

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 TYPES OF INFLATION
I. Demand Pull Inflation
II. Cost-Push Inflation
III. Pricing Power Inflation
IV. Sectoral Inflation
V. Hyper Inflation

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 T Y P E S O F I N F L AT I O N

I. Demand Pull Inflation

This type of inflation occurs when total demand for goods
and services in an economy exceeds the supply of the same.
When the supply is less, the prices of these goods and
services would rise, leading to a situation called as demand-
pull inflation.

II. Cost-Push Inflation

As the name suggests, if there is increase in the cost of
production of goods and services, there is likely to be a
forceful increase in the prices of finished goods and services.

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 T Y P E S O F I N F L AT I O N

III. Pricing Power Inflation

 Pricing power inflation is more often called as
administered price inflation. This type of inflation occurs
when the business houses and industries decide to
increase the price of their respective goods and services
to increase their profit margins.

 A point noteworthy is pricing power inflation does not

occur at the time of FINANCIAL CRISES and economic
depression, or when there is a downturn in the economy.

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 T Y P E S O F I N F L AT I O N

IV. Sectoral Inflation

 The sectoral inflation takes place when there is an increase

in the price of the goods and services produced by a certain
sector of industries.

 For instance, an increase in the cost of crude oil would

directly affect all the other sectors, which are directly
related to the oil industry.

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 T Y P E S O F I N F L AT I O N

V. Hyper Inflation:
 Hyper Inflation is also known as runaway inflation or
galloping inflation. This type of inflation occurs during or
soon after a war. This can usually lead to the complete
breakdown of a country’s monetary system. However, this
type of inflation is short-lived.

 In 1923,Germany suffered from Hyper inflation. in Germany,

inflation touched approximately 322 % per month.

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THANK YOU