What is Inflation

What is Inflation?
According to Saleem, et al.(2013) Inflation is a rise in the general level of prices of goods and services in an economy over a period of time.
Types of Inflation
1. Creeping Inflation
2. Walking Inflation
3. Running Inflation
4. Hyperinflation
Creeping Inflation is when the rise in price is very slow likevthat of a snail or creeper. A sustained rise in prices of annual increase of less than 3 percent per annum is characterized as creeping Inflation. Such an increase in prices is regarded safe and essential for economic growth.
Walking Inflation occurs wjeb prices rise moderately and annual inflation rate is a single digit. This occurs the rate of rise in prices is in the intermediate range of 3 to less than 10 percent.
Running Inflation is when prices rise rapidly at the rate of 10 to 20 percent per annum.
Hyperinflation occurs when prices rise very fast at fouble or tripple digit rates. This could get to a situation where the inflation rate can no longer be measurable and absolutely uncontrollable.

Course of Inflation
1. Demand induced factors: this refers to a situation where prices increased due to higher demand.
2. Cost push factors: this is otherwise referred to "supply shock inflation" this suggests that shortages or shocks to thr available supply of a certain good or product will cause a triple effect through the economy by rising prices through the supply chain from the producer to the consumer.
3. Money supply: too much money in circulation cause prices of goods to rise.

Causes of Inflation in Nigeria
Fashoring(1986) identifies seven principal factors that caused inflation in Nigeria
1. Rapid urbanization
2. International factors
3. Structural changes in the economy
4. Wage determination process
5. Increase demand and supply of goods
6. Oil production and money supply
7. Government expenditure and policy.

Inflation Control
Inflation can be controlled by using tools of Monetary, Fiscal and Physical measures
*I will more about policies use to control inflation later in this group
What did you think caused Inflation in Nigeria? Which types of Inflation Nigeria is facing?

Comments

Post a Comment

Popular posts from this blog

What is Population

Image
What is Population? Population is the total number of able-bodied and disabled men, women and children living in a country. In other word, population is the total number of people living in a country.  Thomas Robert Malthus principal of population A British economist Robert Malthus wrote in his "Essay on Population" in 1978. He wrote that overpopulation was the root of many problems industrial European society suffered from— poverty, malnutrition, and disease could all be attributed to overpopulation.  He argued that population was growing faster than the rate at which production was growing. According to him, the population of Britain was growing in geometrical progression, that is in multiples 1, 2, 4, 8, 16, 32, etc. While food supply was growing in arithmetical progression, that is 1, 2, 3, 4, 5, 6, etc. He argued that stage will be reach where food supply will not catch-up with population growth.  "As a solution, Malthus urged “moral restraint.” That is, he declare
Read more

Basics Concept of Economics

Basic concept of economics: 1. Wants: wants is desire to own goods and services that give satisfaction. Wants are unlimited while the means are limited. 2. Choice: Choice refers to the ability of a consumer or producer to decide which good, service or resource to purchase or provide from a range of possible alternatives. 3. Scarcity: Scarcity is the limited availability of a commodity , which may be in demand in the market or by the commons. Scarcity may also means an individual's lack of resources to buy commodities. 4. Scale of Preference: Scale of preference refers to a list of unsatisfied wants arranged in order of their relative importance. 5. Opportunity Cost: Opportunity cost is the value of the next best alternative forgone as a result of making a decision.
Read more