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Types of Inflation: Inflation and Running or Runaway Inflation

There are three types of inflation: 1. Low inflation, which increases prices slowly in the single digits over longer periods. 2. Galloping inflation, where prices increase very quickly in the double or even triple digits annually over shorter periods. 3. Hyperinflation, which is the most severe with prices increasing at an extremely high and accelerating rate, such as millions or trillions annually, and prices may double overnight.

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Rohit Kumar
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273 views1 page

Types of Inflation: Inflation and Running or Runaway Inflation

There are three types of inflation: 1. Low inflation, which increases prices slowly in the single digits over longer periods. 2. Galloping inflation, where prices increase very quickly in the double or even triple digits annually over shorter periods. 3. Hyperinflation, which is the most severe with prices increasing at an extremely high and accelerating rate, such as millions or trillions annually, and prices may double overnight.

Uploaded by

Rohit Kumar
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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TYPES OF INFLATION

Depending upon the range of increase, and its severity,


inflation may be classified into three broad
categories:

I. Low Inflation

Such inflation is slow and on predictable11 lines which might


be called small or gradual12. This is a
comparative term which puts it opposite to the faster, bigger
and unpredictable inflations. Low
inflation takes place in a longer period and the range of
increase is usually in single digit. Such
inflation has also been called as creeping inflation12. We
may take an example of the monthly
inflation rate of a country for six months being 2.3%, 2.6%,
2.7%, 2.9%, 3.1% and 3.4%. Here the
range of change is of 1.1% and over a period of six months.

II. Galloping Inflation


This is a very high inflation running in the range of
double-digit or triple digit (i.e. 20%, 100% or
200% a year)13. In the decades of 1970s and 1980s, many
Latin American countries such as
Argentina, Chile, and Brazil had such rates of inflationin the
range of 50 to 700 per cent. The
Russian economy did show such inflation after the
disintegration of the ex-USSR in the late 1980s.
Contemporary Journalism has given some other names to this
inflationhopping inflation, jumping
inflation and running or runaway inflation.14

III. Hyperinflation

This form of inflation is large and accelerating15 which


might have the annual rates in million or
even trillion16 . In such inflation not only range of increase is
very large but the increase takes place
in a very short span of time, prices shoot up overnight.

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