What is inflation?

What is inflation?

Inflation is a decrease in the purchasing power of money.

For example, last year with 500 somoni you could buy 5 kilograms of meat, 5 litres of oil and 5 kilograms of potatoes, but this year for the same amount of money you could buy only 4 kilograms of these goods, and the money ran out. This process is called inflation.
What are the different types of inflation?
? Low - up to 6 per cent per year. This level of inflation is comfortable for both consumers and businesses. In addition, it favours economic growth. This is the level at which most countries try to keep inflation.
? Moderate - from 6% to 10% per year. This is already dangerous as inflation can get out of control and turn into high inflation.
? High - 10% to 100% per year. Such inflation creates instability in the market and people as well as companies cannot plan their future.
? Hyperinflation - prices rise by hundreds or thousands of per cent. In particularly severe cases, people abandon money and turn to barter. Hyperinflation usually occurs during severe crises and wars.
? Deflation is negative inflation. That is, prices do not rise, but instead fall. Deflation slows down the economy. Consumers stop buying goods in anticipation of even lower prices. Because of this, companies reduce production.