Inflation is, in economic terms, the increase in the price of goods and services offered in the market during a specific period of time (usually referring to 1 year).

Classification

Inflation can be classified as:

• Deflation: is the decrease in prices. It is negative inflation.

• Moderate inflation: moderate inflation would be considered as a “normal” state. It refers to the slow increase in prices with inflation rates that usually do not reach 10%. This type of inflation allows for proper development of economic activity.

• Galloping inflation: galloping inflation happens when prices increase at two or three-digit rates (15, 50 or 150%) in an average period of one year, that is, a good or service could even triple its price in just one year. They are usually produced by important economic changes.

• Hyperinflation: consists of a loss of purchasing power at a very high rate. This occurs when a very high inflation rate is recorded, with price increases above 1,000% annually. This type of inflation indicates that a country is experiencing a severe economic crisis.

Effects

Some of the possible effects of inflation are the following:

• Decrease in consumers’ purchasing power.

• Slowdown or stopping of the country’s economic progress by generating distrust, both to producers and consumers.

• Decrease in the competitiveness of the country’s products abroad.

• (…).

In this link you can see the ranking of countries according to GDP.

We hope this information is very useful to you.