What is inflation?

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Inflation has been top of mind for many over the past few years. But how long will it persist? In June 2022, inflation in the United States jumped to 9.1 percent, reaching the highest level since February 1982. The inflation rate has since slowed in the United States , as well as in Europe , Japan , and the United Kingdom , particularly in the final months of 2023. But even though global inflation is higher than it was before the COVID-19 pandemic, when it hovered around 2 percent, it’s receding to historical levels . In fact, by late 2022, investors were predicting that long-term inflation would settle around a modest 2.5 percent. That’s a far cry from fears that long-term inflation would mimic trends of the 1970s and early 1980s—when inflation exceeded 10 percent.

Get to know and directly engage with senior McKinsey experts on inflation.

Ondrej Burkacky is a senior partner in McKinsey’s Munich office, Axel Karlsson is a senior partner in the Stockholm office, Fernando Perez is a senior partner in the Miami office, Emily Reasor is a senior partner in the Denver office, and Daniel Swan is a senior partner in the Stamford, Connecticut, office.

Inflation refers to a broad rise in the prices of goods and services across the economy over time, eroding purchasing power for both consumers and businesses. Economic theory and practice, observed for many years and across many countries, shows that long-lasting periods of inflation are caused in large part by what’s known as an easy monetary policy . In other words, when a country’s central bank sets the interest rate too low or increases money growth too rapidly, inflation goes up. As a result, your dollar (or whatever currency you use) will not go as far  today as it did yesterday. For example: in 1970, the average cup of coffee in the United States cost 25 cents; by 2019, it had climbed to $1.59. So for $5, you would have been able to buy about three cups of coffee in 2019, versus 20 cups in 1970. That’s inflation, and it isn’t limited to price spikes for any single item or service; it refers to increases in prices across a sector, such as retail or automotive—and, ultimately, a country’s economy.

How does inflation affect your daily life? You’ve probably seen high rates of inflation reflected in your bills—from groceries to utilities to even higher mortgage payments. Executives and corporate leaders have had to reckon with the effects of inflation too, figuring out how to protect margins while paying more for raw materials.

But inflation isn’t all bad. In a healthy economy, annual inflation is typically in the range of two percentage points, which is what economists consider a sign of pricing stability. When inflation is in this range, it can have positive effects: it can stimulate spending and thus spur demand and productivity when the economy is slowing down and needs a boost. But when inflation begins to surpass wage growth, it can be a warning sign of a struggling economy.

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Inflation may be declining in many markets, but there’s still uncertainty ahead: without a significant surge in productivity, Western economies may be headed for a period of sustained inflation or major economic reset , as Japan has experienced in the first decades of the 21st century.

What does seem to be changing are leaders’ attitudes. According to the 2023 year-end McKinsey Global Survey on economic conditions , respondents reported less fear about inflation as a risk to global and domestic economic growth . But this sentiment varies significantly by region: European respondents were most concerned about the effects of inflation, whereas respondents in North America offered brighter views.

What causes inflation?

Monetary policy is a critical driver of inflation over the long term. The current high rate of inflation is a result of increased money supply , high raw materials costs , labor mismatches , and supply disruptions —exacerbated by geopolitical conflict .

In general, there are two primary types, or causes, of short-term inflation:

  • Demand-pull inflation occurs when the demand for goods and services in the economy exceeds the economy’s ability to produce them. For example, when demand for new cars recovered more quickly than anticipated from its sharp dip at the beginning of the COVID-19 pandemic, an intervening shortage  in the supply of semiconductors  made it hard for the automotive industry to keep up with this renewed demand. The subsequent shortage of new vehicles resulted in a spike in prices for new and used cars.
  • Cost-push inflation occurs when the rising price of input goods and services increases the price of final goods and services. For example, commodity prices spiked sharply  during the pandemic as a result of radical shifts in demand, buying patterns, cost to serve, and perceived value across sectors and value chains. To offset inflation and minimize impact on financial performance, industrial companies were forced to increase prices for end consumers.

Learn more about McKinsey’s Growth, Marketing & Sales  Practice.

What are some periods in history with high inflation?

Economists frequently compare the current inflationary period with the post–World War II era , when price controls, supply problems, and extraordinary demand in the United States fueled double-digit inflation gains—peaking at 20 percent in 1947—before subsiding at the end of the decade. Consumption patterns today have been similarly distorted, and supply chains have been disrupted  by the pandemic.

The period from the mid-1960s through the early 1980s in the United States, sometimes called the “Great Inflation,” saw some of the country’s highest rates of inflation, with a peak of 14.8 percent in 1980. To combat this inflation, the Federal Reserve raised interest rates to nearly 20 percent. Some economists attribute this episode partially to monetary policy mistakes rather than to other causes, such as high oil prices. The Great Inflation signaled the need for public trust  in the Federal Reserve’s ability to lessen inflationary pressures.

Inflation isn’t solely a modern-day phenomenon, of course. One very early example of inflation comes from Roman times, from around 200 to 300 CE. Roman leaders were struggling to fund an army big enough to deal with attackers from multiple fronts. To help, they watered down  the silver in their coinage, causing the value of money to slowly fall—and inflation to pick up. This led merchants to raise their prices, causing widespread panic. In response, the emperor Diocletian issued what’s now known as the Edict on Maximum Prices, a series of price and wage controls designed to stop the rise of prices and wages (one helpful control was a maximum price for a male lion). But because the edict didn’t address the root cause of inflation—the impure silver coin—it didn’t fix the problem.

How is inflation measured?

Statistical agencies measure inflation first by determining the current value of a “basket” of various goods and services consumed by households, referred to as a price index. To calculate the rate of inflation over time, statisticians compare the value of the index over one period with that of another. Comparing one month with another gives a monthly rate of inflation, and comparing from year to year gives an annual rate of inflation.

In the United States, the Bureau of Labor Statistics publishes its Consumer Price Index (CPI), which measures the cost of items that urban consumers buy out of pocket. The CPI is broken down by region and is reported for the country as a whole. The Personal Consumption Expenditures (PCE) price index —published by the US Bureau of Economic Analysis—takes into account a broader range of consumer spending, including on healthcare. It is also weighted by data acquired through business surveys.

How does inflation affect consumers and companies differently?

Inflation affects consumers most directly, but businesses can also feel the impact:

  • Consumers lose purchasing power when the prices of items they buy, such as food, utilities, and gasoline, increase. This can lead to household belt-tightening and growing pessimism about the economy .
  • Companies lose purchasing power and risk seeing their margins decline , when prices increase for inputs used in production. These can include raw materials like coal and crude oil , intermediate products such as flour and steel, and finished machinery. In response, companies typically raise the prices of their products or services to offset inflation, meaning consumers absorb these price increases. The challenge for many companies is to strike the right balance between raising prices to cover input cost increases while simultaneously ensuring that they don’t raise prices so much that they suppress demand.

How can organizations respond to high inflation?

During periods of high inflation, companies typically pay more for materials , which decreases their margins. One way for companies to offset losses and maintain margins is by raising prices for consumers. However, if price increases are not executed thoughtfully, companies can damage customer relationships and depress sales —ultimately eroding the profits they were trying to protect.

When done successfully, recovering the cost of inflation for a given product can strengthen relationships and overall margins. There are five steps companies can take to ADAPT  (adjust, develop, accelerate, plan, and track) to inflation:

  • Adjust discounting and promotions and maximize nonprice levers. This can include lengthening production schedules or adding surcharges and delivery fees for rush or low-volume orders.
  • Develop the art and science of price change. Instead of making across-the-board price changes, tailor pricing actions to account for inflation exposure, customer willingness to pay, and product attributes.
  • Accelerate decision making tenfold. Establish an “inflation council” that includes dedicated cross-functional, inflation-focused decision makers who can act quickly and nimbly on customer feedback.
  • Plan options beyond pricing to reduce costs. Use “value engineering” to reimagine a portfolio and provide cost-reducing alternatives to price increases.
  • Track execution relentlessly. Create a central supporting team to address revenue leakage and to manage performance rigorously. Traditional performance metrics can be less reliable when inflation is high .

Beyond pricing, a variety of commercial and technical levers can help companies deal with price increases in an inflationary market , but other sectors may require a more tailored response to pricing.

Learn more about our Financial Services , Industrials & Electronics , Operations , Strategy & Corporate Finance , and  Growth, Marketing & Sales Practices.

How can CEOs help protect their organizations against uncertainty during periods of high inflation?

In today’s uncertain environment, in which organizations have a much wider range of stakeholders, leaders must think about performance beyond short-term profitability. CEOs should lead with the complete business cycle and their complete slate of stakeholders in mind.

CEOs need an inflation management playbook , just as central bankers do. Here are some important areas to keep in mind while scripting it:

  • Design. Leaders should motivate their organizations to raise the profile of design  to a C-suite topic. Design choices for products and services are critical for responding to price volatility, scarcity of components, and higher production and servicing costs.
  • Supply chain. The most difficult task for CEOs may be convincing investors to accept supply chain resiliency as the new table stakes. Given geopolitical and economic realities, supply chain resiliency has become a crucial goal for supply chain leaders, alongside cost optimization.
  • Procurement. CEOs who empower their procurement  organizations can raise the bar on value-creating contributions. Procurement leaders have told us time and again that the current market environment is the toughest they’ve experienced in decades. CEOs are beginning to recognize that purchasing leaders can be strategic partners by expanding their focus beyond cost cutting to value creation.
  • Feedback. A CEO can take a lead role in playing back the feedback the organization is hearing. In today’s tight labor market, CEOs should guide their companies to take a new approach to talent, focusing on compensation, cultural factors, and psychological safety .
  • Pricing. Forging new pricing relationships with customers will test CEOs in their role as the “ultimate integrator.” Repricing during inflationary times is typically unpleasant for companies and customers alike. With setting new prices, CEOs have the opportunity to forge deeper relationships with customers, by turning to promotions, personalization , and refreshed communications around value.
  • Agility. CEOs can strive to achieve a focus based more on strategic action and less on firefighting. Managing the implications of inflation calls for a cross-functional, disciplined, and agile response.

A practical example: How is inflation affecting the US healthcare industry?

Consumer prices for healthcare have rarely risen faster than the rate of inflation—but that’s what’s happening today. The impact of inflation on the broader economy has caused healthcare costs to rise faster than the rate of inflation. Experts also expect continued labor shortages in healthcare—gaps of up to 450,000 registered nurses and 80,000 doctors —even as demand for services continues to rise. This drives up consumer prices and means that higher inflation could persist. McKinsey analysis as of 2022 predicted that the annual US health expenditure is likely to be $370 billion higher by 2027 because of inflation.

This climate of risk could spur healthcare leaders to address productivity, using tech levers to boost productivity while also reducing costs. In order to weather the storm, leaders will need to quickly set high aspirations, align their organizations around them, and execute with speed .

What is deflation?

If inflation is one extreme of the pricing spectrum, deflation is the other. Deflation occurs when the overall level of prices in an economy declines and the purchasing power of currency increases. It can be driven by growth in productivity and the abundance of goods and services, by a decrease in demand, or by a decline in the supply of money and credit.

Generally, moderate deflation positively affects consumers’ pocketbooks, as they can purchase more with less money. However, deflation can be a sign of a weakening economy, leading to recessions and depressions. While inflation reduces purchasing power, it also reduces the value of debt. During a period of deflation, on the other hand, debt becomes more expensive. And for consumers, investments such as stocks, corporate bonds, and real estate become riskier.

A recent period of deflation in the United States was the Great Recession, between 2007 and 2008. In December 2008, more than half of executives surveyed by McKinsey  expected deflation in their countries, and 44 percent expected to decrease the size of their workforces.

When taken to their extremes, both inflation and deflation can have significant negative effects on consumers, businesses, and investors.

For more in-depth exploration of these topics, see McKinsey’s Operations Insights  collection. Learn more about Operations consulting , and check out operations-related job opportunities  if you’re interested in working at McKinsey.

Articles referenced:

  • “ Investing in productivity growth ,” March 27, 2024, Jan Mischke , Chris Bradley , Marc Canal, Olivia White , Sven Smit , and Denitsa Georgieva
  • “ Economic conditions outlook during turbulent times, December 2023 ,” December 20, 2023
  • “ Forward Thinking on why we ignore inflation—from ancient times to the present—at our peril with Stephen King ,” November 1, 2023
  • “ Procurement 2023: Ten CPO actions to defy the toughest challenges ,” March 6, 2023, Roman Belotserkovskiy , Carolina Mazuera, Marta Mussacaleca , Marc Sommerer, and Jan Vandaele
  • “ Why you can’t tread water when inflation is persistently high ,” February 2, 2023, Marc Goedhart and Rosen Kotsev
  • “ Markets versus textbooks: Calculating today’s cost of equity ,” January 24, 2023, Vartika Gupta, David Kohn, Tim Koller , and Werner Rehm  
  • “ Inflation-weary Americans are increasingly pessimistic about the economy ,” December 13, 2022, Gonzalo Charro, Andre Dua , Kweilin Ellingrud , Ryan Luby, and Sarah Pemberton
  • “ Inflation fighter and value creator: Procurement’s best-kept secret ,” October 31, 2022, Roman Belotserkovskiy , Ezra Greenberg , Daphne Luchtenberg, and Marta Mussacaleca
  • “ Prime Numbers: Rethink performance metrics when inflation is high ,” October 28, 2022, Vartika Gupta, David Kohn, Tim Koller , and Werner Rehm
  • “ The gathering storm: The threat to employee healthcare benefits ,” October 20, 2022, Aditya Gupta , Akshay Kapur , Monisha Machado-Pereira , and Shubham Singhal
  • “ Utility procurement: Ready to meet new market challenges ,” October 7, 2022, Roman Belotserkovskiy , Abhay Prasanna, and Anton Stetsenko
  • “ The gathering storm: The transformative impact of inflation on the healthcare sector ,” September 19, 2022, Addie Fleron, Aneesh Krishna , and Shubham Singhal
  • “ Pricing during inflation: Active management can preserve sustainable value ,” August 19, 2022, Niels Adler and Nicolas Magnette
  • “ Navigating inflation: A new playbook for CEOs ,” April 14, 2022, Asutosh Padhi , Sven Smit , Ezra Greenberg , and Roman Belotserkovskiy
  • “ How business operations can respond to price increases: A CEO guide ,” March 11, 2022, Andreas Behrendt ,  Axel Karlsson , Tarek Kasah, and  Daniel Swan
  • “ Five ways to ADAPT pricing to inflation ,” February 25, 2022,  Alex Abdelnour , Eric Bykowsky, Jesse Nading,  Emily Reasor , and Ankit Sood
  • “ How COVID-19 is reshaping supply chains ,” November 23, 2021,  Knut Alicke ,  Ed Barriball , and Vera Trautwein
  • “ Navigating the labor mismatch in US logistics and supply chains ,” December 10, 2021,  Dilip Bhattacharjee , Felipe Bustamante, Andrew Curley, and  Fernando Perez
  • “ Coping with the auto-semiconductor shortage: Strategies for success ,” May 27, 2021,  Ondrej Burkacky , Stephanie Lingemann, and Klaus Pototzky

This article was updated in April 2024; it was originally published in August 2022.

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Economic essays on inflation


  • Definition – Inflation – Inflation is a sustained rise in the cost of living and average price level.
  • Causes Inflation – Inflation is caused by excess demand in the economy, a rise in costs of production, rapid growth in the money supply.


  • Costs of Inflation – Inflation causes decline in value of savings, uncertainty, confusion and can lead to lower investment.


  • Problems measuring inflation – why it can be hard to measure inflation with changing goods.
  • Different types of inflation – cost-push inflation, demand-pull inflation, wage-price spiral,
  • How to solve inflation . Policies to reduce inflation, including monetary policy, fiscal policy and supply-side policies.
  • Trade off between inflation and unemployment . Is there a trade-off between the two, as Phillips Curve suggests?
  • The relationship between inflation and the exchange rate – Why high inflation can lead to a depreciation in the exchange rate.
  • What should the inflation target be? – Why do government typically target inflation of 2%
  • Deflation – why falling prices can lead to negative economic growth.
  • Monetarist Theory – Monetarist theory of inflation emphasises the role of the money supply.
  • Criticisms of Monetarism – A look at whether the monetarist theory holds up to real-world scenarios.
  • Money Supply   – What the money supply is.
  • Can we have economic growth without inflation?
  • Predicting inflation
  • Link between inflation and interest rates
  • Should low inflation be the primary macroeconomic objective?

See also notes on Unemployment

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Essay on Inflation

Students are often asked to write an essay on Inflation in their schools and colleges. And if you’re also looking for the same, we have created 100-word, 250-word, and 500-word essays on the topic.

Let’s take a look…

100 Words Essay on Inflation

Understanding inflation.

Inflation is when prices of goods and services rise over time. This means you need more money to buy the same things. It’s like a slow-motion robbery!

Causes of Inflation

Inflation is often due to increased production costs or increased demand for goods and services. When people want more of something, and it’s scarce, prices go up.

Impact of Inflation

Inflation affects everyone. If your income doesn’t increase as fast as inflation, you’ll have less buying power. But, if you’re a business owner, you might be able to raise prices and make more money.

Controlling Inflation

Governments try to control inflation by adjusting interest rates, taxes, and government spending. It’s a tricky balancing act to keep inflation low but not too low.

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  • Paragraph on Inflation

250 Words Essay on Inflation

Inflation, a crucial economic concept, refers to the rate at which the general level of prices for goods and services is rising, subsequently eroding purchasing power. It’s an indicator of the economic health of a nation, with moderate inflation signifying a growing economy.

The Causes of Inflation

Inflation generally occurs due to two primary factors: demand-pull and cost-push inflation. Demand-pull inflation transpires when demand for goods and services surpasses their supply. On the other hand, cost-push inflation arises when the costs of production escalate, causing producers to increase prices to maintain profit margins.

Effects of Inflation

Inflation impacts various aspects of the economy. It erodes the purchasing power of money, causing consumers to spend more for the same goods or services. Inflation can also create uncertainty in the economy, affecting investment and saving decisions. However, moderate inflation can stimulate spending and investment, driving economic growth.

Managing Inflation

Central banks attempt to control inflation through monetary policy. By adjusting interest rates, they influence the level of spending and investment in the economy. Higher interest rates typically reduce spending, curbing inflation. Conversely, lower interest rates stimulate spending, potentially leading to inflation.

Inflation is a complex and multifaceted subject. Understanding its causes, effects, and the measures to control it is essential for both macroeconomic stability and individual financial well-being. As future leaders, it’s crucial for us as students to grasp these concepts to make informed decisions in our professional and personal lives.

500 Words Essay on Inflation

Introduction to inflation.

Inflation is a complex economic phenomenon that affects every aspect of our lives, from the cost of living to the value of money. It is defined as the rate at which the general level of prices for goods and services is rising, subsequently, purchasing power is falling. Central banks attempt to limit inflation, and avoid deflation, in order to keep the economy running smoothly.

Inflation is primarily caused by an increase in the money supply that outpaces economic growth. Ever since the end of the gold standard, governments have had the ability to create money at will. If a nation’s money supply grows too rapidly compared to its production of goods and services, prices will increase, leading to inflation.

Additionally, inflation can be spurred by demand-pull conditions, where demand for goods and services exceeds their supply. Cost-push inflation, on the other hand, occurs when the costs of production increase, causing producers to raise prices to maintain their profit margins.

Impacts of Inflation

Inflation affects economies in various ways. While mild inflation is viewed as a sign of a healthy economy, hyperinflation can lead to economic instability. It erodes purchasing power as the same amount of money can buy fewer goods and services. This can lead to uncertainty and a decrease in spending and investment, which can slow economic growth.

Moreover, inflation can harm savers if the inflation rate surpasses the interest rate on their savings. It also favors borrowers, as the real value of their debt diminishes over time. This redistribution of wealth from savers to borrowers can lead to social and economic inequalities.

Central banks use monetary policy to control inflation. They adjust the money supply by setting interest rates and through open market operations. By raising interest rates, central banks can decrease the money supply, making borrowing more expensive and slowing economic activity, thereby reducing inflation.

Furthermore, governments can use fiscal policy to control inflation. This involves changing tax rates and levels of government spending to influence the level of demand in the economy. By reducing demand, governments can put downward pressure on prices and reduce inflation.

Inflation is an intricate part of our economic systems. It is a double-edged sword that can stimulate economic growth when mild, but can also lead to economic instability when it becomes too high. Understanding inflation is crucial for policymakers, investors, and consumers alike as it influences our decisions and shapes our economic reality. By effectively managing inflation, governments can promote economic stability and growth, thereby improving the standard of living for their citizens.

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descriptive essay about inflation

Inflation: What It Is, How It Can Be Controlled, and Extreme Examples

What you need to know about the purchasing power of money and how it changes

  • Search Search Please fill out this field.

What Is Inflation?

Understanding inflation, types of price indexes.

  • Pros and Cons

Controlling Inflation

  • Inflation, Deflation, and Disinflation

Hedging Against Inflation

The bottom line.

descriptive essay about inflation

Pete Rathburn is a copy editor and fact-checker with expertise in economics and personal finance and over twenty years of experience in the classroom.

descriptive essay about inflation

Inflation is a measure of how quickly prices are increasing over time. In other words, inflation measures how quickly money loses its purchasing power .

The inflation rate is calculated as the average price increase of a basket of selected goods and services over one year. High inflation means that prices are increasing quickly, with low inflation meaning that prices are increasing more slowly. Inflation can be contrasted with deflation, which occurs when prices decline and purchasing power increases.

Key Takeaways

  • Inflation measures how quickly the prices of goods and services are rising.
  • Inflation is sometimes classified into three types: demand-pull inflation, cost-push inflation, and built-in inflation.
  • The most commonly used inflation indexes are the Consumer Price Index and the Wholesale Price Index.
  • Inflation can be viewed positively or negatively depending on the individual viewpoint and rate of change.
  • Those with tangible assets, like property or stocked commodities, may like to see some inflation as that raises the value of their assets.

While it is easy to measure the price changes of individual products over time, human needs extend beyond just one or two products. Individuals need a big and diversified set of products as well as a host of services for living a comfortable life. They include commodities like food grains, metal, fuel, utilities like electricity and transportation, and services like healthcare , entertainment, and labor.

Inflation aims to measure the overall impact of price changes for a diversified set of products and services. It allows for a single value representation of the increase in the price level of goods and services in an economy over a specified time.

Prices rise, which means that one unit of money buys fewer goods and services. This loss of purchasing power impacts the cost of living for the common public which ultimately leads to a deceleration in economic growth. The consensus view among economists is that sustained inflation occurs when a nation's money supply growth outpaces economic growth.

The increase in the Consumer Price Index For All Urban Consumers (CPI-U) over the 12 months ending March 2024 on an unadjusted basis. Prices rose 0.4% on a seasonally adjusted basis in March 2024 from the previous month.

To combat this, the monetary authority (in most cases, the central bank ) takes the necessary steps to manage the money supply and credit to keep inflation within permissible limits and keep the economy running smoothly.

Theoretically, monetarism is a popular theory that explains the relationship between inflation and the money supply of an economy. For example, following the Spanish conquest of the Aztec and Inca empires, massive amounts of gold and silver flowed into the Spanish and other European economies. Since the money supply rapidly increased, the value of money fell, contributing to rapidly rising prices.

Inflation is measured in a variety of ways depending on the types of goods and services. It is the opposite of deflation , which indicates a general decline in prices when the inflation rate falls below 0%. Keep in mind that deflation shouldn't be confused with disinflation , which is a related term referring to a slowing down in the (positive) rate of inflation.

Investopedia / Julie Bang

Causes of Inflation

An increase in the supply of money is the root of inflation, though this can play out through different mechanisms in the economy. A country's money supply can be increased by the monetary authorities by:

  • Printing and giving away more money to citizens
  • Legally devaluing (reducing the value of) the legal tender currency
  • Loaning new money into existence as reserve account credits through the banking system by purchasing government bonds from banks on the secondary market (the most common method)
  • Supply bottlenecks and shortages of key goods, causing other prices to rise.

In all of these cases, the money ends up losing its purchasing power. The mechanisms of how this drives inflation can be classified into three types: demand-pull inflation, cost-push inflation, and built-in inflation.

Demand-Pull Effect

Demand-pull inflation occurs when an increase in the supply of money and credit stimulates the overall demand for goods and services to increase more rapidly than the economy's production capacity. This increases demand and leads to price rises.

When people have more money, it leads to positive consumer sentiment. This, in turn, leads to higher spending, which pulls prices higher. It creates a demand-supply gap with higher demand and less flexible supply, which results in higher prices.

Melissa Ling {Copyright} Investopedia, 2019

Cost-Push Effect

Cost-push inflation is a result of the increase in prices working through the production process inputs. When additions to the supply of money and credit are channeled into a commodity or other asset markets, costs for all kinds of intermediate goods rise. This is especially evident when there's a negative economic shock to the supply of key commodities.

These developments lead to higher costs for the finished product or service and work their way into rising consumer prices. For instance, when the money supply is expanded, it creates a speculative boom in oil prices . This means that the cost of energy can rise and contribute to rising consumer prices, which is reflected in various measures of inflation.

Built-in Inflation

Built-in inflation is related to adaptive expectations or the idea that people expect current inflation rates to continue in the future. As the price of goods and services rises, people may expect a continuous rise in the future at a similar rate.

As such, workers may demand more costs or wages to maintain their standard of living. Their increased wages result in a higher cost of goods and services, and this wage-price spiral continues as one factor induces the other and vice-versa.

Depending upon the selected set of goods and services used, multiple types of baskets of goods are calculated and tracked as price indexes. The most commonly used price indexes are the Consumer Price Index (CPI) and the Wholesale Price Index (WPI) .

The Consumer Price Index (CPI)

The CPI is a measure that examines the weighted average of prices of a basket of goods and services that are of primary consumer needs. They include transportation, food, and medical care.

CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them based on their relative weight in the whole basket. The prices in consideration are the retail prices of each item, as available for purchase by the individual citizens.

Changes in the CPI are used to assess price changes associated with the cost of living , making it one of the most frequently used statistics for identifying periods of inflation or deflation. In the U.S., the Bureau of Labor Statistics (BLS) reports the CPI on a monthly basis and has calculated it as far back as 1913.

The CPI-U, which was introduced in 1978, represents the buying habits of approximately 88% of the non-institutional population of the United States.

The Wholesale Price Index (WPI)

The WPI is another popular measure of inflation. It measures and tracks the changes in the price of goods in the stages before the retail level.

While WPI items vary from one country to another, they mostly include items at the producer or wholesale level. For example, it includes cotton prices for raw cotton, cotton yarn, cotton gray goods, and cotton clothing.

Although many countries and organizations use WPI, many other countries, including the U.S., use a similar variant called the producer price index (PPI) .

The Producer Price Index (PPI)

The PPI is a family of indexes that measures the average change in selling prices received by domestic producers of intermediate goods and services over time. The PPI measures price changes from the perspective of the seller and differs from the CPI which measures price changes from the perspective of the buyer.

In all variants, the rise in the price of one component (say oil) may cancel out the price decline in another (say wheat) to a certain extent. Overall, each index represents the average weighted price change for the given constituents which may apply at the overall economy, sector , or commodity level.

The Formula for Measuring Inflation

The above-mentioned variants of price indexes can be used to calculate the value of inflation between two particular months (or years). While a lot of ready-made inflation calculators are already available on various financial portals and websites, it is always better to be aware of the underlying methodology to ensure accuracy with a clear understanding of the calculations. Mathematically,

Percent Inflation Rate = (Final CPI Index Value ÷ Initial CPI Value) x 100

Say you wish to know how the purchasing power of $10,000 changed between January 1975 and January 2024. One can find price index data on various portals in a tabular form. From that table, pick up the corresponding CPI figures for the given two months. For September 1975, it was 52.1 (initial CPI value) and for January 2024, it was 308.417 (final CPI value).

Plugging in the formula yields:

Percent Inflation Rate = (308.417 ÷ 52.1) x 100 = (5.9197) x 100 = 591.97%

Since you wish to know how much $10,000 from January 1975 would worth be in January 2024, multiply the inflation rate by the amount to get the changed dollar value:

Change in Dollar Value = 5.9197 x $10,000 = $59,197

This means that $10,000 in January 1975 will be worth $59,197 today. Essentially, if you purchased a basket of goods and services (as included in the CPI definition) worth $10,000 in 1975, the same basket would cost you $59,197 in January 2024.

Advantages and Disadvantages of Inflation

Inflation can be construed as either a good or a bad thing, depending upon which side one takes, and how rapidly the change occurs.

Individuals with tangible assets (like property or stocked commodities) priced in their home currency may like to see some inflation as that raises the price of their assets, which they can sell at a higher rate.

Inflation often leads to speculation by businesses in risky projects and by individuals who invest in company stocks because they expect better returns than inflation.

An optimum level of inflation is often promoted to encourage spending to a certain extent instead of saving. If the purchasing power of money falls over time, there may be a greater incentive to spend now instead of saving and spending later. It may increase spending, which may boost economic activities in a country. A balanced approach is thought to keep the inflation value in an optimum and desirable range.


Buyers of such assets may not be happy with inflation, as they will be required to shell out more money. People who hold assets valued in their home currency, such as cash or bonds, may not like inflation, as it erodes the real value of their holdings.

As such, investors looking to protect their portfolios from inflation should consider inflation-hedged asset classes, such as gold, commodities, and real estate investment trusts (REITs). Inflation-indexed bonds are another popular option for investors to profit from inflation .

High and variable rates of inflation can impose major costs on an economy. Businesses, workers, and consumers must all account for the effects of generally rising prices in their buying, selling, and planning decisions.

This introduces an additional source of uncertainty into the economy, because they may guess wrong about the rate of future inflation. Time and resources expended on researching, estimating, and adjusting economic behavior are expected to rise to the general level of prices. That's opposed to real economic fundamentals, which inevitably represent a cost to the economy as a whole.

Even a low, stable, and easily predictable rate of inflation, which some consider otherwise optimal, may lead to serious problems in the economy. That's because of how, where, and when the new money enters the economy.

Whenever new money and credit enter the economy, it is always in the hands of specific individuals or business firms. The process of price level adjustments to the new money supply proceeds as they then spend the new money and it circulates from hand to hand and account to account through the economy.

Inflation does drive up some prices first and drives up other prices later. This sequential change in purchasing power and prices (known as the Cantillon effect) means that the process of inflation not only increases the general price level over time. But it also distorts relative prices , wages, and rates of return along the way.

Economists, in general, understand that distortions of relative prices away from their economic equilibrium are not good for the economy, and Austrian economists even believe this process to be a major driver of cycles of recession in the economy.

Leads to higher resale value of assets

Optimum levels of inflation encourage spending

Buyers have to pay more for products and services

Impose higher prices on the economy

Drives some prices up first and others later

A country’s financial regulator shoulders the important responsibility of keeping inflation in check. It is done by implementing measures through monetary policy , which refers to the actions of a central bank or other committees that determine the size and rate of growth of the money supply.

In the U.S., the Fed's monetary policy goals include moderate long-term interest rates, price stability, and maximum employment. Each of these goals is intended to promote a stable financial environment. The Federal Reserve clearly communicates long-term inflation goals in order to keep a steady long-term rate of inflation , which is thought to be beneficial to the economy.

Price stability or a relatively constant level of inflation allows businesses to plan for the future since they know what to expect. The Fed believes that this will promote maximum employment, which is determined by non-monetary factors that fluctuate over time and are therefore subject to change.

For this reason, the Fed doesn't set a specific goal for maximum employment, and it is largely determined by employers' assessments. Maximum employment does not mean zero unemployment, as at any given time there is a certain level of volatility as people vacate and start new jobs.

Hyperinflation is often described as a period of inflation of 50% or more per month.

Monetary authorities also take exceptional measures in extreme conditions of the economy. For instance, following the 2008 financial crisis, the U.S. Fed kept the interest rates near zero and pursued a bond-buying program called quantitative easing (QE) .

Some critics of the program alleged it would cause a spike in inflation in the U.S. dollar, but inflation peaked in 2007 and declined steadily over the next eight years. There are many complex reasons why QE didn't lead to inflation or hyperinflation , though the simplest explanation is that the recession itself was a very prominent deflationary environment, and quantitative easing supported its effects.

Consequently, U.S. policymakers have attempted to keep inflation steady at around 2% per year. The European Central Bank (ECB) has also pursued aggressive quantitative easing to counter deflation in the eurozone, and some places have experienced negative interest rates . That's due to fears that deflation could take hold in the eurozone and lead to economic stagnation.

Moreover, countries that experience higher rates of growth can absorb higher rates of inflation. India's target is around 4% (with an upper tolerance of 6% and a lower tolerance of 2%), while Brazil aims for 3.25% (with an upper tolerance of 4.75% and a lower tolerance of 1.75%).

Meaning of Inflation, Deflation, and Disinflation

While a high inflation rate means that prices are increasing, a low inflation rate does not mean that prices are falling. Counterintuitively, when the inflation rate falls, prices are still increasing, but at a slower rate than before. When the inflation rate falls (but remains positive) this is known as disinflation .

Conversely, if the inflation rate becomes negative, that means that prices are falling. This is known as deflation , which can have negative effects on an economy. Because buying power increases over time, consumers have less incentive to spend money in the short term, resulting in falling economic activity.

Stocks are considered to be the best hedge against inflation , as the rise in stock prices is inclusive of the effects of inflation. Since additions to the money supply in virtually all modern economies occur as bank credit injections through the financial system, much of the immediate effect on prices happens in financial assets that are priced in their home currency, such as stocks.

Special financial instruments exist that one can use to safeguard investments against inflation . They include Treasury Inflation-Protected Securities (TIPS) , low-risk treasury security that is indexed to inflation where the principal amount invested is increased by the percentage of inflation.

One can also opt for a TIPS mutual fund or TIPS-based exchange-traded fund (ETF). To get access to stocks, ETFs, and other funds that can help avoid the dangers of inflation, you'll likely need a brokerage account. Choosing a stockbroker can be a tedious process due to the variety among them.

Gold is also considered to be a hedge against inflation, although this doesn't always appear to be the case looking backward.

Examples of Inflation

Since all world currencies are fiat money , the money supply could increase rapidly for political reasons, resulting in rapid price level increases. The most famous example is the hyperinflation that struck the German Weimar Republic in the early 1920s.

The nations that were victorious in World War I demanded reparations from Germany, which could not be paid in German paper currency, as this was of suspect value due to government borrowing. Germany attempted to print paper notes, buy foreign currency with them, and use that to pay their debts.

This policy led to the rapid devaluation of the German mark along with the hyperinflation that accompanied the development. German consumers responded to the cycle by trying to spend their money as fast as possible, understanding that it would be worth less and less the longer they waited. More money flooded the economy, and its value plummeted to the point where people would paper their walls with practically worthless bills. Similar situations occurred in Peru in 1990 and in Zimbabwe between 2007 and 2008.

What Causes Inflation?

There are three main causes of inflation: demand-pull inflation, cost-push inflation, and built-in inflation.

  • Demand-pull inflation refers to situations where there are not enough products or services being produced to keep up with demand, causing their prices to increase.
  • Cost-push inflation, on the other hand, occurs when the cost of producing products and services rises, forcing businesses to raise their prices.
  • Built-in inflation (which is sometimes referred to as a wage-price spiral) occurs when workers demand higher wages to keep up with rising living costs. This in turn causes businesses to raise their prices in order to offset their rising wage costs, leading to a self-reinforcing loop of wage and price increases.

Is Inflation Good or Bad?

Too much inflation is generally considered bad for an economy, while too little inflation is also considered harmful. Many economists advocate for a middle ground of low to moderate inflation, of around 2% per year.

Generally speaking, higher inflation harms savers because it erodes the purchasing power of the money they have saved; however, it can benefit borrowers because the inflation-adjusted value of their outstanding debts shrinks over time.

What Are the Effects of Inflation?

Inflation can affect the economy in several ways. For example, if inflation causes a nation’s currency to decline, this can benefit exporters by making their goods more affordable when priced in the currency of foreign nations.

On the other hand, this could harm importers by making foreign-made goods more expensive. Higher inflation can also encourage spending, as consumers will aim to purchase goods quickly before their prices rise further. Savers, on the other hand, could see the real value of their savings erode, limiting their ability to spend or invest in the future.

Why Is Inflation So High Right Now?

In 2022, inflation rates around the world rose to their highest levels since the early 1980s. While there is no single reason for this rapid rise in global prices, a series of events worked together to boost inflation to such high levels.

The COVID-19 pandemic led to lockdowns and other restrictions that greatly disrupted global supply chains, from factory closures to bottlenecks at maritime ports. Governments also issued stimulus checks and increased unemployment benefits to counter the financial impact on individuals and small businesses. When vaccines became widespread and the economy bounced back, demand (fueled in part by stimulus money and low interest rates) quickly outpaced supply, which still struggled to get back to pre-COVID levels.

Russia's unprovoked invasion of Ukraine in early 2022 led to economic sanctions and trade restrictions on Russia, limiting the world's supply of oil and gas since Russia is a large producer of fossil fuels. Food prices also rose as Ukraine's large grain harvests could not be exported. As fuel and food prices rose, it led to similar increases down the value chains. The Fed raised interest rates to combat the high inflation, which significantly came down in 2023, though it remains above pre-pandemic levels .

Inflation is a rise in prices, which results in the decline of purchasing power over time. Inflation is natural and the U.S. government targets an annual inflation rate of 2%; however, inflation can be dangerous when it increases too much, too fast.

Inflation makes items more expensive, especially if wages do not rise by the same levels of inflation. Additionally, inflation erodes the value of some assets, especially cash. Governments and central banks seek to control inflation through monetary policy.

U.S. Bureau of Labor Statistics. " CONSUMER PRICE INDEX ," Page 1.

Edo, Anthony and Melitz, Jacques. " The Primary Cause of European Inflation in 1500-1700: Precious Metals or Population? The English Evidence ." CEPII Working Paper , October 2019, pp. 13-14. Download PDF.

U.S. Bureau of Labor Statistics. " Consumer Price Index: Overview ."

U.S. Bureau of Labor Statistics. " Chapter 17. The Consumer Price Index (Updated 2-14-2018) ," Page 2.

U.S. Bureau of Labor Statistics. " Consumer Price Index Chronology ."

U.S. Bureau of Labor Statistics. " Producer Price Index Frequently Asked Questions (FAQs) ," Select "4. How does the Producer Price Index differ from the Consumer Price Index?"

U.S. Bureau of Labor Statistics. " Producer Price Index Frequently Asked Questions (FAQs) ," Select "3. When did the Wholesale Price Index become the Producer Price Index?"

U.S. Bureau of Labor Statistics. " Producer Price Indexes ."

U.S. Bureau of Labor Statistics. " Consumer Price Index Historical Tables for U.S. City Average ."

U.S. Bureau of Labor Statistics. " Historical CPI-U ," Page 3.

Adam Smith Institute. " The Cantillion Effect ."

Foundation for Economic Education. " The Current Economic Crisis and the Austrian Theory of the Business Cycle ."

Board of Governors of the Federal Reserve System. " Review of Monetary Policy Strategy, Tools, and Communication ."

Board of Governors of the Federal Reserve System. " What is the Lowest Level of Unemployment that the U.S. Economy Can Sustain? "

Fischer, Stanley and et al. " Modern Hyper- and High Inflations ." Journal of Economic Literature , vol. 40, no. 3, September 2002, pp. 837.

Federal Reserve History. " The Great Recession and its Aftermath ."

Federal Reserve Bank of New York. " Liberty Street Economics: Ten Years Later—Did QE Work? "

Congressional Budget Office. " How the Federal Reserve’s Quantitative Easing Affects the Federal Budget ."

Board of Governors of the Federal Reserve System. " FAQs: Why Does the Federal Reserve Aim for Inflation of 2 Percent Over the Longer Run? "

European Central Bank. " How Quantitative Easing Works ."

Reserve Bank of India. " Monetary Policy ," Select "The Monetary Policy Framework."

Central Bank of Brazil. " Inflation Targeting Track Record ."

TreasuryDirect. " Treasury Inflation-Protected Securities (TIPS) ."

University of Illinois, Urbana-Champaign. " 1920s Hyperinflation in Germany and Bank Notes ."

Rossini, Renzo (Editors Alejandro M. Werner and Alejandro Santos). " Staying the Course of Economic Success: Chapter 2. Peru’s Recent Economic History: From Stagnation, Disarray, and Mismanagement to Growth, Stability, and Quality Policies ." International Monetary Fund, September 2015.

Kramarenko, Vitaliy and et al. " Zimbabwe: Challenges and Policy Options after Hyperinflation ." International Monetary Fund , June 2010, no. 6.

The World Bank. " Inflation, Consumer Prices (Annual %) ."

Federal Reserve Bank of St. Louis, FRED. " Consumer Price Index for All Urban Consumers: All Items in U.S. City Average ."

Board of Governors of the Federal Reserve System. " Open Market Operations ."

  • Inflation: What It Is, How It Can Be Controlled, and Extreme Examples 1 of 41
  • 10 Common Effects of Inflation 2 of 41
  • How to Profit From Inflation 3 of 41
  • When Is Inflation Good for the Economy? 4 of 41
  • History of the Cost of Living 5 of 41
  • Why Are P/E Ratios Higher When Inflation Is Low? 6 of 41
  • What Causes Inflation? How It's Measured and How to Protect Against It 7 of 41
  • Understand the Different Types of Inflation 8 of 41
  • Wage Push Inflation: Definition, Causes, and Examples 9 of 41
  • Cost-Push Inflation: When It Occurs, Definition, and Causes 10 of 41
  • Cost-Push Inflation vs. Demand-Pull Inflation: What's the Difference? 11 of 41
  • Inflation vs. Stagflation: What's the Difference? 12 of 41
  • What Is the Relationship Between Inflation and Interest Rates? 13 of 41
  • Inflation's Impact on Stock Returns 14 of 41
  • How Does Inflation Affect Fixed-Income Investments? 15 of 41
  • How Inflation Affects Your Cost of Living 16 of 41
  • How Inflation Impacts Your Savings 17 of 41
  • How Inflation Impacts Your Retirement Income 18 of 41
  • What Impact Does Inflation Have on a Dollar's Value Over Time? 19 of 41
  • Inflation and Economic Recovery 20 of 41
  • What Is Hyperinflation? Causes, Effects, Examples, and How to Prepare 21 of 41
  • Why Didn't Quantitative Easing Lead to Hyperinflation? 22 of 41
  • Worst Cases of Hyperinflation in History 23 of 41
  • How the Great Inflation of the 1970s Happened 24 of 41
  • What Is Stagflation, What Causes It, and Why Is It Bad? 25 of 41
  • Understanding Purchasing Power and the Consumer Price Index 26 of 41
  • Consumer Price Index (CPI): What It Is and How It's Used 27 of 41
  • Why Is the Consumer Price Index Controversial? 28 of 41
  • Core Inflation: What It Is and Why It's Important 29 of 41
  • What Is Headline Inflation (Reported in Consumer Price Index)? 30 of 41
  • What Is the GDP Price Deflator and Its Formula? 31 of 41
  • Indexation Explained: Meaning and Examples 32 of 41
  • Inflation Accounting: Definition, Methods, Pros & Cons 33 of 41
  • Inflation-Adjusted Return: Definition, Formula, and Example 34 of 41
  • What Is Inflation Targeting, and How Does It Work? 35 of 41
  • Real Economic Growth Rate: Definition, Calculation, and Uses 36 of 41
  • Real Gross Domestic Product (Real GDP): How to Calculate It, vs. Nominal 37 of 41
  • Real Income, Inflation, and the Real Wages Formula 38 of 41
  • Real Interest Rate: Definition, Formula, and Example 39 of 41
  • Real Rate of Return: Definition, How It's Used, and Example 40 of 41
  • Wage-Price Spiral: What It Is and How It’s Controlled 41 of 41

descriptive essay about inflation

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Essay on Inflation: Meaning, Measurement and Causes

descriptive essay about inflation

Let us make in-depth study of the meaning, measurement and causes of inflation.

Meaning of Inflation:

By inflation we mean a general rise in prices. To be more correct, inflation is a persistent rise in general price level rather than a once-for-all rise in it.

Rate of inflation is either measured by the percentage change in wholesale price index number (WPI) over a period or by percentage change in consumer price index number (CPI).

Opinion surveys conducted in India and the United States reveal that inflation is the most important concern of the people as it affects their standard of living adversely A high rate of inflation erodes the real incomes of the people. A high rate of infla­tion makes the life of the poor people miserable. It is therefore described as anti-poor, inflation redistributes income and wealth in favour of the rich.


Thus, it makes the rich richer and the poor poorer. Above all, a high rate inflation adversely effects output and encourages investment in unproductive channels such as purchase of gold, silver, jewellery and real estate. Therefore, it adversely affects long-run economic growth, especially in developing countries like India. Inflation has therefore been described ‘as enemy number one’.

Measurement of Rate of Inflation:

Inflation has been one of the important problems facing the economies of the world. Precisely stated, inflation is the rate of change of general price level during a period of time. And the general price level in a period is the result of inflation in the past. Through rate of inflation economists measures the cost of living in an economy. Let us explain how rate of inflation is measured. Suppose P i X represents the price level on 31st March 2006 and P represents the price level on 31st March 2007. Then the rate of inflation in year 2006-07 will be equal to


Thus, rate of inflation during 2006-07 will be 10 per cent. This is called point-to-point inflation rate. There are 52 weeks in a year, average of price indexes of 52 weeks of a year (say 2005-06) can be calculated to compare the average of price indexes of 52 weeks of year 2006-07 and find the inflation rate on the basis of average weekly price levels of a year. In both these ways rate of inflation in different years is measured and compared.

It is evident from above that price level in a period is measured by a price index. There are several commodities in an economy which are produced and consumed by the people. It is through construction of a weighted price index that economists aggregate money prices of several commodi­ties which are assigned different weights.

In India the wholesale price Index (WPI) of all commodities with base year 1993-94 price level at the end of fiscal year is used to measure rate of inflation and is widely reported in the media. Since the wholesale price index does not truly indicate the cost of living, separate Consumer Price Index (CPI) for agricultural labourers and Consumer Price Index (CPI) for industrial workers (with base 1982 = 100) at the end of fiscal year are constructed to measure rate of inflation.

In constructing the Consumer Price Index (CPI) the price of a basket of goods which a typical consumer, industrial worker or agricultural labourer as the case may be are taken into account.

What Causes Inflation?

1. keynes’s view:.

Classical economists thought that it was the quantity of money in the economy that determined the general price level in the economy. According to them, rate of inflation depends on the growth of money supply in the economy. Keynes criticized the ‘ Quantity Theory of Money’ and showed that expansion in money supply did not always lead to inflation or rise in price level.

Keynes who before the Second World War explained that involuntary unemployment and depression were due to the deficiency of aggregate demand, during the war period when price rose very high he explained that inflation was due to excessive aggregate demand. Thus, Keynes put forward what is now called demand-pull theory of inflation.

Demand – Pull Inflation

Thus, according to Keynes, inflation is caused by a situation whereby the pressure of aggregate demand for goods and services exceeds the available supply of output (both begging counted at the prices ruling at the beginning of a period). In such a situ­ation, rise in price level is the natural consequence.

Now, this imbalance between aggregate demand and supply may be the result of more than one force at work. As we know aggregate demand is the sum of consumers’ spending on consumer goods and services, government spending on consumer goods and services and net investment being planned by the entrepreneurs.

But excess of aggregate demand over aggregate supply does not explain persistent rise in prices, year after year. An important factor which feeds inflation is wage-price spiral. Wage-price spiral operates as follows: A rise in prices reduces the real consumption of the wage earners. They will, therefore, press for higher money wages to compensate them for the higher cost of living. Now, an increase in wages, if granted, will raise the prime cost of production and, therefore, entrepreneurs will raise the prices of their products to recover the increment in cost.

This will add fuel to the inflationary fire. A further rise in prices raises the cost of living still further and the workers ask for still higher wages. In this way, wages and prices chase each other and the process of inflationary rise in prices gathers momentum. If unchecked, this may lead to hyper-inflation which signifies a state of affairs where wages and prices chase each other at a very quick speed.

2. Monetarist View:

The Keynesian explanation of demand-pull inflation is important to note that both the original quantity theorists and the modem monetarists, prominent among whom is Milton Friedman, explain inflation in terms of excess demand for goods and services. But there is an important difference between the monetarist view of demand-pull inflation and the Keynesian view of it. Keynes explained inflation as arising out of real sector forces.

In his model of inflation excess demand comes into being as a result of autonomous increase in expenditure on investment and consumption or increase in government expenditure. That is, the increase in aggregate expenditure or demand occurs independent of any increase in the supply of money.

On the other hand, monetarists explain the emergence of excess demand and the resultant rise in prices on account of the increase in money supply in the economy. To quote Milton Friedman, a Nobel Laureate in economics. “Inflation is always and everywhere a monetary phenomenon…… and can be produced only by a more rapid increase in the quantity of money than in output.”

Friedman holds that when money supply is increased in the economy, then there emerges an excess supply of real money balances with the public over their demand for money. This disturbs the monetary equilibrium. In order to restore the equilibrium the public will reduce the money balances by increasing expenditure on goods and services.

Thus, according to Friedman and other modern quantity theorists, the excess supply of real monetary balances results in the increase in aggregate demand for goods and services. If there is no proportionate increase in output, then extra money supply leads to excess demand for goods and services. This causes inflation or rise in prices. Thus, according to monetarists let by Prof. Milton Friedman, excess creation of money supply is the main factor responsible for inflation.

Cost-Push Inflation:

Even when there is no increase in aggregate demand, prices may still rise. This may happen if the costs, particularly the wage costs, increase. Now, as the level of employment increases, the demand for workers rises progressively so that the bargaining position of the workers is enhanced. To exploit this situation, they may ask for an increase in wage rates which are not justi­fiable either on grounds of a prior rise in productivity or cost of living.

The employers in a situation of high demand and employment are more agreeable to concede to these wage claims because they hope to pass on these rises in costs to the consumers in the form of rise in prices. Therefore, when inflation is caused by rise in wages or hike in other input costs such as rise in prices of raw materials, rise in prices of petroleum products, it is called cost-push inflation. If this happens we have another inflationary factor at work.

Besides the increase in wages of labour without any increase in its productivity, or rise in costs of other inputs there is another factor responsible for cost-push inflation. This is the increase in the profit margins by the firms working under monopolistic or oligopolistic conditions and as a result charging higher prices from the consumers. In the former case when the cause of cost-push inflation is the rise in wages it is called wage-push inflation and in the latter case when the cause of cost-push inflation is the rise in profit margins, it is called profit-push inflation.

In addition to the rise in wage rate of labour and increase in profit margin, in the seventies the other cost-push factors (also called supply shocks) causing increase in marginal cost of production became more prominent in bringing about rise in prices. During the seventies, rise in prices of raw materials, especially energy inputs such a hike in crude oil prices made by OPEC resulted in rise in prices of petroleum products.

For example, sharp rise in world oil prices during 1973-75 and again in 1979-80 produced significant cost-push factor which caused inflation not only in Indian but all over the world. Now, in June-August 2004 again the world oil prices have greatly risen. As a result, in India prices of petrol, diesel, cooking gas were raised by petroleum companies. This is tending to raise the rate of inflation.

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  • Cost-Push Inflation and Demand-Pull or Mixed Inflation

122 Inflation Essay Topic Ideas & Examples

🏆 best inflation topic ideas & essay examples, 👍 good essay topics on inflation, ⭐ simple & easy inflation essay titles, 💡 interesting topics to write about inflation.

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  • The US and the Philippines: Unemployment and Inflation In cyclical terms, this rising inflation is actually the product and not the cause of these record-high oil prices and the idea that the U.S.had failed to think of the above-discussed alternatives to the energy […]
  • Interest Rate and Inflation in Netherlands As interest rate rises, demand for debt falls as cost of capital will increase and growth rate declined. As, more funds is shifting to Market B, central bank may raise the bank rate to stabilise […]
  • Monetary Policy in an Economy: Inflation Inflation can be defined as a persistent rise in the general level of prices or alternatively, a persistent fall in the value of money.
  • Dollarization the Main Tool to Reduce Inflation In general, wouldollarization’ means the substitution of hard currency for the domestic currency as the medium of exchange, and above all as the store of value, in a large part of the domestic economy, so […]
  • Inflation Targeting in Emerging Countries Inflation Targeting is the public announcement of numerical targets for inflation for the year. Some emerging market countries that engage in inflation targeting have gone too far in the limitation of exchange rate flexibility, with […]
  • Future Inflation and Growth Figures The increase in real GDP in the first half of 2007 was the same as that in the second half of 2006: at an annual rate of 2.25%.
  • “Inflation Rise Hits US Consumers” BBC Article The main focus of the article’s concern is the inflation rise that US economics experiences now and the impact it has on US consumer spending.
  • Inflation Dynamics: Mistakes in the Forecaster’s Behavior In this case, the authors of the article pay attention to the evaluation of the Phillips curve and understanding its advantages and drawbacks.
  • Inflation Effect on Japan’s and Mexico’s Economies Thus, the study aimed to establish the influence of inflation and FDI on the GDP of a developed country, developing country, and the world.
  • Saudi Arabia and Inflation: Past, Present, Future What is the role of the Saudi Central Bank about inflation? What is the historical inflation trend in Saudi?
  • Inflation Expectations: Households and Forecasters The New Keynesian formula that the authors of the paper were trying to create, in its turn was supposed to provide justification for the lack of forecast efficacy in determining the changes in inflation rates, […]
  • Inflation Targeting in Emerging Economies Debates supporting the concept of inflation targeting are premised on the idea that recession remains as a greater challenge relative to the state of high inflation. The basis of inflation targeting is always to monitor […]
  • The Federal Reserve and the Inflation Problem Louis in 2005, it was noted that the economic hero of the inflationary decades was the then chairman of the Fed, Paul Volcker.
  • Economics and the Great Inflation in US and Japan In the 1990s and the early years of the 21st century, the federal reserve policy makers opted to adopt the mop-up-after strategy-policy of letting the bubbles burst and then mopping up there after.
  • Inflation Tradeoffs and the Phillips Curve In the findings, Lucas concluded that the there is a direct relationship and variance in the tradeoff between full employment and inflation rate at a particular level of input in the countries studied.
  • Inflation and Unemployment in the United States In the 21st century, there are so many issues in the economy of the United States. This is increasing the demand for skilled workers by the day as opposed to the unskilled.
  • Unemployment and Inflation Issues In most cases, if one is suffering structural unemployment, it is as a result of improvement in a certain area, or a change in the way things are done.
  • Fluctuations in Inflation and Employment Debate surrounded what is termed the multiplier effect: are they higher for tax cuts or government spending, the differences in multiplier effect from different tax cuts, Incentive impact from tax cuts.
  • Inflation in the 1970s In such a case, the reduced injections into the circular flow of the economy trim down the demand, which reduces inflation, and the general growth of the economy reduces significantly.
  • Inflation Causes: Structuralism and Monetarism One of the features of this kind of inflation is a rapid rise in the price level with the currency loosing its value.
  • The Effects of Inflation Targeting In theory inflation targeting is straightforward: the impending rate of inflation is predicted by the central bank, later on it is juxtaposed with the target rates which the government considers as appropriate for the economy […]
  • The Euro Zone’s Rising Inflation and Unemployment Rate However, the euro zone found itself in a predicament from late 2009 after the economic downturns that faced some countries in the euro zone.
  • Inflation Tax – Printing More Money to Cover the War Expenses The subsequent encroachment of inflation diminishes the value of money hence even if people had more money, the value of their cash was meaningless, a phenomenon similar to tax collection, which reduces the total amount […]
  • Economic Condition of Singapore: Inflation Hits 5.2% in March Some of the effects of high inflation rate that has been felt in the economy are the increase of the housing prices, and cost of fuel increased by approximately 5%, thereby increasing the cost of […]
  • Inflation Is Here to Stay, as Prices Will Always Go Up Monetary policy refers to the actions pursued by the central bank of a country to regulate the amount of money supply in the economy.
  • Inflation in the United Kingdom According to the Bank of England, inflation occurs when the demand exceeds the ability by the economy’s capacity to produce goods and services.
  • Effect of a Permanent Increase in Oil Price on Inflation and Output During the same year, the alterations in the price of oil were activated by a change in the supply of the same commodity in the market place.
  • Consumer Price Index: Measuring Inflation In this case, the volumes of money being circulated exceeds the supply of goods and services in the same market thus leading to an upward adjustment of prices in order to absorb the extra monies […]
  • The Cause of China’s Inflation The supply is affected by the increase of prices of food in the global market, whereby, the Chinese government finds it difficult to satisfy the food demand of the increasing population of the Chinese population.
  • China’s Economic Growth and Inflation On the road to becoming the second largest economy, China has experienced growth rates of about 10% in the last 30 years making it to top the list of the fastest growing economies.
  • Evaluate Government Policies to Reduce the Rate of Inflation The rate of inflation is the adjustment in the index of price in a single year to a new one expressed in percentages.
  • Inflation in Saudi Arabia This paper, using the quarterly data from 1980 to 2010, examines the causes behind the inflation in Saudi, its effects, and the effectiveness of the counter-strategies and policies the Saudi government has put in place […]
  • Inflation Rates in Sweden The recession of the early 1990s was largely responsible for the drop in inflation rates. As per the theoretical model of money supply and inflation, increases in money supply will lead to inflationary pressures.
  • China Currency Policy and Inflation The sphere of inflation in China relates to the consumer price index which has recorded a rising orientation in the near past.
  • Current News of Economics: The Global Inflation Inflation has affected the total demand for goods and services in the economy, thus exceeding the supply. This means that you would have to pay more for the same amount of goods and services you […]
  • Analysis of Unemployment and Inflation in the United States This was at the height of the recession that continues to grapple the country with major negative implications in the economy.
  • GDP, Unemployment, Inflation, and Economic Growth
  • Absolute and Relative Anti-Inflation Reputation: Evidence From the Bond Markets
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  • Can Demography Improve Inflation Forecasts? The Case of Sweden
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  • Analyzing the Relationship Between Inflation Rate and Per Capita GDP Growth
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  • Fast vs. Gradual Policies to Control Inflation
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  • What Drives the Relationship Between Inflation and Price Dispersion: Market Power vs. Price Rigidity
  • How Much Did Speculation Contribute to the Recent Food Price Inflation?
  • MAPI: Model for Analysis and Projection of Inflation in France
  • Budget Deficit, Inflation, and Debt Sustainability: Evidence From Turkey
  • Monetarism: Printing Money to Curb Inflation
  • Capacity Constraints, Inflation, and the Transmission Mechanism: Forward-Looking vs. Myopic Policy Rules
  • When Did Inflation Expectations in the Euro Area De-Anchor?
  • Capturing the Link Between M3 Growth and Inflation in the Euro Zone
  • Implementing Monetary Cooperation Through Inflation Targeting
  • German Great Inflation: Summary & Analysis
  • The Maastricht Inflation Criterion: On the Effect of the European Union Expansion
  • What Unemployment Rates Tell Us About the Future Inflation
  • Applying Foreign Exchange Interventions as an Additional Instrument Under Inflation Targeting: The Case of Ukraine
  • China’s Economic Slowdown and International Inflation Dynamics
  • The Impact of Inflation Targeting on the Real Economy of Developing and Emerging Countries
  • Effects of Inflation on Business: The Good and the Bad
  • U.S. Inflation Dynamics: What Drives Them Over Different Frequencies
  • Structural Inflation and the 1994 ‘Monetary’ Crisis in China
  • Macroeconomic Aggregate Model for Analysis of Inflation and Stabilization of the Russian Economy
  • Cyclical vs. Acyclical Inflation: A Deeper Dive
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  • Forecasting Inflation Using Constant Gain Least Squares
  • Stopping Hyperinflation: Lessons From the German Inflation Experience of the 1920s
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  • Globalization and Inflation Dynamics: The Impact of Increased Competition
  • The Relationship Between Inflation and Economic Growth: A Multi-Country Empirical Analysis
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  • Assessing the Gap Between Observed and Perceived Inflation in the Euro Area
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  • Bootstrapping Covariate Unit Root Tests: An Application to Inflation Rates
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  • Inflation and the Gig Economy: E-Tailing and Self-Employment Rise in Disrupting the Phillips Curve
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Home — Essay Samples — Economics — Inflation — The Rise of Inflation Rate in the Us


The Rise of Inflation Rate in The Us

  • Categories: American Government Economic Growth Inflation

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Words: 1605 |

Published: Jul 15, 2020

Words: 1605 | Pages: 4 | 9 min read

Table of contents

Introduction, financial measures in the us government's inflationary rise, recommedation, what are some factors that contribute to the rise in inflation, how did the inflation affect the market, implementation of additional monetary easing (so-called qe 3), purchase policies of mbs newly decided at fomc in september.

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How to Write About Inflation

Daniella flores.

  • March 8, 2022
  • Blogging and Podcasting

Ugh, inflation.

If you’re anything like me, you cringe at the sight of the word. To me, it means things are getting more expensive and who loves that? No one, especially not my budget .

It’s 2022, we’re entering the 3rd year of a global pandemic, and inflation is the highest since 1982 according to Trading Economics .

You can watch all the news channels, read all the financial news articles, or even talk to your angry uncle about how inflation is out of control because “Uncle Sam is screwing us again”, but after all of that you are left pretty clueless to what it even is and how it might be affecting your own life.

As we dive into how to write about inflation, let’s get clear on what exactly inflation is, what causes it, how it affects you, and who is profiting from all of it.

What is Inflation?

Inflation is a measure of the rate of rising prices of the goods and services in an economy. When prices rise, the purchasing power of your money decreases.

The purchasing power of our dollar goes down because we have to use more dollars to meet those rising prices. Ultimately, the less we are able to purchase with our dollars the more inflation rises.

What Causes Inflation?

There are several factors that can drive prices upward in an economy. Typically, inflation can result from an increase in production costs or an increase in demand for products and services.

Some of the various factors that drive inflation include:

  • Cost-push inflation: When production costs increase due to increase in raw materials or wages, prices for those products or services increase.
  • Demand-pull inflation: When there is a strong consumer demand for a product or service, the prices will increase.
  • The housing market: When the demand for housing increases, home prices will rise.
  • Expansionary fiscal policy: Fiscal policy is how the government adjusts its spending and tax rates to monitor and influence the economy.

How to Write About Inflation?

When writing about inflation, you have to know your audience and who you’re talking to. Inflation has several nuances of impact depending on the sector and personal experience.

It’s best to simplify it down as much as you can when talking to your audience and do so without bias.

To break inflation down in terms that a 5 year old can understand, I spoke with someone who is much more qualified and experienced on the subject, Jonathan Thomas M.B.A., who is a Financial Coach and the host of Money Talks , a YouTube channel that helps folks to turn their financial goals into day to day decisions.

Jonathan simplifies inflation as “Inflation means everything costs more to produce. When I was a kid a cheeseburger cost me 50 cents at McDonald’s. Every year the cost rose on food like bread, meat, cheese, etc. Because the cost to make a cheeseburger went up, McDonald’s had to raise the price. Now a cheeseburger costs $1.59.”

Give Examples in Your Writing, Especially for Those More Complicated Experiences of Inflation

When talking about inflation, it’s best to pair examples and analogies like Jonathan did to help the reader better understand it, how it affects them, and how it might affect those around them.

For instance, an example from my own life is the experience of the rise of housing costs from one end of the country to the other during the height of Covid-19 in 2020 which could illustrate a more complex form of inflation.

My wife and I moved across the country in December 2020 after we both became location independent, meaning we could work from anywhere. We weren’t the only people that did this in the last couple of years.

In fact, 15.9 million people had already moved by the time we did and their decision to move was influenced by the pandemic in one way or another. Some of those people had to move because of rising rent costs and other financial reasons like job loss. Others feared getting Covid-19 where they lived or wanted to move to be closer to family.

This drove the price of housing up and fast.

We moved from St. Louis, Missouri where the housing prices are below the national average, to a small town in Washington state where the housing is much higher. We went from a $100k house to almost a $300k house.

Our real estate broker explained that because so many people in the larger cities were moving to rural areas like the one we were moving to, this sort of mass migration drove the demand for housing up.

At the same time with increasing demand, there was a smaller inventory of affordable housing available and few new building projects for that same category of affordable housing in the area. This created a seller’s market with bidding wars on new available listings sometimes starting as soon as the house was listed.

Folks were buying houses without ever looking at them, waiving inspections, and due to bidding wars would offer sometimes as much as $50k over asking price for the same house you’d find in St. Louis, MO for $200k less.

Jonathan explains that a part of this equation is “Demand increased for real estate so the cost of lumber increased as there wasn’t enough available for everyone to keep building.”

The other part includes the Federal Reserve’s influence on interest rates that kept mortgage rates low during this time as well, surging that housing demand even higher as it meant American’s could secure mortgages at the lowest interest rate in history in December 2020 – 2.68%.

Framing Inflation as Good or Bad

Inflation can be both good and bad. However, how you write about inflation must take into account your reader’s experience with their current financial situation and how inflation might be impacting that experience.

For instance, if you say inflation is good because it means people can make more money and their assets can build wealth quicker, your reader may not resonate with that same perspective.

If your reader had a house in Washington at the height of the seller’s market last year, they would’ve seen that inflation as a good thing for them because it increased the value of their own house. Some folks could sell their house for as much as $500,000 more than what they bought it for.

Then there were folks on the other side of that fence where they were ready to purchase their first home that year, and found nothing they could afford. Or they lost a job and couldn’t afford rent anymore. So, they had to leave their home to move somewhere cheaper to turn around and see the landlord listing their home for half the price after so they could fill the unit with a tenant.

It’s also because of the rate of inflation since then that folks are seeing those same discounted rents, now going back up.

Inflation can be good and bad for everyone. Be mindful of how you frame it to your audience.

Conclusion: How Well Do You Know Your Audience?

When you discuss any sort of financial topic, it is crucial that you know exactly who you’re talking to. People have charged reactions to reading financial content because of how personal and political money is. Charge them up in a positive way, not a negative one.

Start with a simple audience persona which you can use a template like the one found here . Ask yourself what are the most common problems that your audience might have with inflation and then speak to those problems when covering the topic.

If you know your audience, writing about inflation is going to be a breeze.

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With Inflation This High, Nobody Knows What a Dollar Is Worth

Strong reactions to rising prices and misunderstandings about the value of money are rampant, our columnist says.

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An illustration with a person pushing a shopping cart, another holding shopping bags, another with a flower pot and a fourth climbing a ladder with a dollar bill under her arm.

By Jeff Sommer

Jeff Sommer writes Strategies , a weekly column on markets, finance and the economy.

Rising prices have made people grumpy. They have depressed consumer confidence , despite a growing economy and low unemployment.

But exactly how inflation is hurting, helping and confusing people is hard to understand. Everyone knows that the cost of living has increased. Yet unless you’re constantly pulling out a calculator, you’re unlikely to know whether your wages are keeping up with inflation, whether the stock market has actually hit a real peak or whether a lottery jackpot is as sweet as the marketers claim.

There’s a fancy name for the common human failure to see past the gaudy prices largely created by inflation. This widespread inability to recognize what money is really worth is known as money illusion.

Irving Fisher, a Yale economist, wrote a book about it nearly a century ago. John Maynard Keynes , the British economist, popularized the idea. Behavioral economists have studied it extensively. But their insights tend to be forgotten when prices are fairly stable, as they were in the United States until three years ago.

When inflation increases annually at 2 percent or so, who really cares about it? You can function well without thinking about the slowly eroding value of your money — although old-timers notice it because even at a 2 percent annual inflation rate, prices double every 36 years.

But now that we’ve been living with high inflation for a while, everyone is prone to money illusion, to one extent or another.

Consider that a March 2021 dollar is worth less than 85 cents today, according to the government’s Consumer Inflation Index calculator . When I keep that number in my head, the dollars in my bank account look especially unimpressive. (And I’ve been working full-time since the summer of 1977. The calculator says that every dollar I earned in my first job is worth only 19 cents in 2024 money. Yikes!)

Of course, everyone knows by now that the purchasing power of the dollar has dropped. When the price of products you see every day has gone up — a gallon of gasoline, a loaf of bread, a cup of coffee — you know prices have risen.

Even so, it’s easy to slip back into thinking a dollar is simply worth a dollar, and that it always has been.

Stocks and the Lottery

Certain aspects of inflation’s toll on the markets are extensively chronicled — yet, I think, the profound effects of inflation on stocks and bonds are still widely underestimated.

First, a few things about inflation’s costs are clear. Because the Federal Reserve has been fighting inflation, short-term rates are high. And several consecutive months of bad inflation readings have made it unlikely that the Fed will cut rates soon. In the bond market, which responds to the Fed’s signals and to traders’ judgments about inflation and economic growth, yields have surged. As a result of all this, a range of consumer credit rates steepened. These include mortgages, credit cards and personal loans.

In addition, the dawning realization this month that the Fed is in no rush to lower interest rates stalled the stock market.

I wrote about a less well-known aspect of inflation recently. The frequent exuberant references to new peaks in the S&P 500 during the recent bull rally didn’t take rising consumer prices into account. (They used what economists call nominal prices, not real ones.) On an inflation-adjusted basis, the stock market only in March approached a new peak for the first time in years. I relied on an analysis by Robert Shiller, a Yale economist, who has long used inflation-adjusted data to pierce the veil of money illusion. Because of setbacks in the past few weeks — high inflation and a faltering stock market — the market has fallen below peak levels in real terms.

Using nominal returns in an inflationary era can lead you to the erroneous conclusion that market is generating phenomenal returns.

Here’s another product of money illusion, one that state governments are exploiting relentlessly: lottery jackpots. As I wrote in March, a spate of recent huge jackpots have been artificially pumped up by questionable marketing practices, high interest rates and inflation.

When used by skilled marketers, money illusion can make unwary humans so excited that they will pour hard-earned money into chimeras, like lotteries and frothy stock markets.

Unhappy Workers

The old refrain, that the rent is too damn high, is resonating now. Steep housing costs are embedded in government indexes and account for a substantial part of recent official inflation increases.

Wages are another nagging problem. Numerous surveys show that many working people believe their wages haven’t kept up with the cost of living. Whether they actually have kept up is debatable. The official data on average wages is volatile and difficult to interpret.

Meticulous research by the economists David Autor, Annie McGrew and Arindrajit Dube shows that for lower-income people, real wages have risen, erasing nearly 40 percent of the longstanding wage gap between richer and poorer workers in the United States.

Even so, because inflation in essentials like food, housing and transportation stresses lower-income people more acutely than the rich, it’s not clear that those wage increases are well appreciated.

In fact, research by Stefanie Stantcheva, a scholar at Harvard and the Brookings Institution, building on earlier work by Professor Shiller, finds that it’s not.

People tend to blame the government for the pain of inflation, and to give themselves credit for raises they have received — even while feeling angry that those raises don’t seem to be keeping up with the cost of living.

That’s a core issue when inflation is high. “Money Illusion,” a classic 1997 paper by the economists Eldar Shafir and Peter Diamond and the psychologist Amos Tversky, found that in periods of high inflation, employers can get away with giving workers raises that amount to substantial wage cuts on an inflation-adjusted basis.

Say inflation is rising at a 4 percent annual rate, and you get a 2 percent raise. You’ve just received a real wage cut. If there’s no inflation, and your wage is cut by 1 percent, you’ve also gotten a wage cut — but you’ve lost less money than in the case of high inflation. What’s odd is that workers tend to view the bigger real wage cuts as fairer.

This makes sense, the authors say, when you factor in money illusion.

Where We Are Now

At the moment, consumer sentiment surveys are skewing lower than they have in periods that were similar in economic growth and employment. Neale Mahoney and Ryan Cummings , two economists at Stanford, think inflation, and lingering dissatisfaction with price levels, may well be the cause.

Looking back at past periods of high inflation, they have done some rough calculations that show that the negative effects of inflation on consumer sentiment erode 50 percent each year. In other words, they have a half life of about one year.

Professor Mahoney updated the research at my request. In the three years through March, prices rose 17.9 percent. According to his model — and, crucially, assuming the rate of inflation drops immediately to the Fed’s forecast of 2.5 percent annually — there would be an eight percentage point increase in consumer sentiment by November. There happens to be a national election then.

Mr. Mahoney and Mr. Cummings both served in the Biden administration. If they are right — and, if inflation really drops quickly and stays low — the improvement in the national mood could tilt the outcome of the election.

But inflation has defied economists’ prediction efforts over the past few years. I make no assumptions.

Certainly, I hope inflation will fall and it will be safe to live an ordinary life without thinking about money illusion. But it will take a long while for me to unsee the shrinking dollar.

An earlier version of this article misspelled the surname of one of the economists who conducted research on wage trends. She is Annie McGrew, not McGraw.

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Inflation Essay Examples

Analysis of the inflation rate of spain between the years 2000-2018 in contrast to the eu area.

This assignment consists of a short report over the evolution of the inflation rate of Spain between the years 2000-2018 against the Eu Area. Using descriptive statistics and techniques I shall give a detailed analysis of the changing inflation rates during this period. Inflation is...

Financial Development: Inflation Rate in Finland

The graph above shows the inflation rate of Finland from 2008 to 2018. Based on the graph, we can see that the inflation rate was shown continuously slope down from 2012 till 2015. Financial development in Finland has been delayed for a drawn out period,...

Research of the Determinants of Inflation in Education Costs

The purpose of this research is to fill in and examine the behavior of prices with reference to the macroeconomic indicator that is inflation and to assist the common folk with regards to personal finance as far as education is concerned. Education is deemed to...

The Inflation Rate in the Eurozone, Its Calculation, Importance, and Causes

Topic B presents the information gathered from different web publications of how the inflation rate is calculated in the Eurozone as well as the Advantages and disadvantages of High Inflation, providing a better understand of the importance of inflation in the economy and how it...

The Impact of Inflation on the Mmo Economies

The majority of online video games be it on the console, pc or mobile have an economy. While it's true that although mobile games now have MMO economies that are rather simple in design, they do mirror much of how real-life economics works.  A lot...

Exploring of Policy Responses to the Inflation - Venezuela and Zimbabwe

This article studies the possible policy responses a government can give to the inflation happened in the country. In specific, this article will first talk about both the cost-push and demand-pull inflation, using example of Venezuela’s great inflation in 2018 and Zimbabwe’s inflation in 2008....

The Main Aspects of Inflation: Impact on Societies’ Finances

Inflation. The governments prime headache when it comes to finances. Law officials try to seek out their goals with central banks to keep the percentages of inflation low. When inflation occurs, a rise in prices occurs which in turn lowers the purchasing power of the...

Types of Inflation, and Its Effect on the Economy

Whenever we hear the word “Inflation” it’s always something bad going to happen. But, could it be good for the economy? Let’s first know what’s “Inflation”, it’s the increase in consumer goods and services price cause of producing several banknotes more than those goods and...

A Report on Inflation in Ukraine from 1993 to 2019

Ukrainian inflation levels fluctuate in very unpredictable manners which can be seen throughout its history. As in 1993 where the inflation level was at 4.73 thousand percent which then dropped to -0.235 percent by the beginning of 2013. Currently, the inflation levels in Ukraine are...

Ukraine Crisis: a New Page in the Old Playbook of Us-nato Hegemony

The predominant rhetoric about 2014 Ukraine crisis oscillate on blaming Russian aggression, be it in Western media or academia. The argument here is, that Vladimir Putin acting as a new tsar perpetuating the long-standing desire to resuscitate the Soviet empire by annexing Crimea. After Crimeans...

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