Inflation is the general increase in the price level of basket of commodities. In every country there are certain index to map inflation. Following are different types of Inflation:
When prices rise at very slow rate, i.e. creeper’s speed, it is called ‘creeping inflation. Generally 3% annual rise in prices is considered as ‘creeping inflation’.
Walking or Trotting Inflation:
When inflation is in between 3% to 7%, it’s regarded as ‘walking or trotting inflation’. Some economists have extended the boundary of this type of inflation up to 10% per annum. This type of inflation is considered as a warning signal for the government to take some measures to control the situation.
This type of inflation comes into action when there’s a rapid rise in prices and the range of this type lies in between 10% to 20% per annum. This type of inflation is controllable only by strong monetary and fiscal measures, lest it will be turned into ‘hyper-inflation’.
Hyper Inflation or Galloping Inflation:
The rise of prices from 20% to 100 % per annum is regarded as ‘hyper-inflation’ or ‘galloping inflation’. This case of inflation is uncontrollable.
Demand Pull Inflation:
This type of inflation is due to an excess demand. In this case supply remains constant (couldn’t be upgraded as per demand). So consequently, the prices go up.
Cost Push Inflation:
When there’s increase in money-wages at speedier rate than that of the rise in the productivity of labour, it results as increased cost of production which furthers the increase in prices. This type of inflation is regarded as cost push inflation.
Majority of the economists hold that, inflation is neither completely ‘demand pull’ nor completely ‘cost push’, the actual inflationary process contains the elements of both. Excess demand and increase in money wages operate at the same time, but it’s not necessary that they start at the same time.
Garner Akley put forward the theory of ‘mark-up inflation’. In simple words it is an advanced explaination of ‘Mixed inflation’. According to Akley First comes demand pull inflation, and it is led by cost push inflation. Markup inflation comes to happen when excess demand increases the prices, which stimulates the production. The increasing production creates excessive demand for the factors of production, and the excessive demand for the factors of production further raises the prices.