Recommended
More Related Content
What's hot
What's hot (20)
Similar to Inflation | Types and causes of inflation
Similar to Inflation | Types and causes of inflation (20)
Recently uploaded
Recently uploaded (20)
Inflation | Types and causes of inflation
- 2. GroupMembers Syed Hassan Raza 21014119-101 Amad ur Rehman 21014119-110 Syed Abdullah 21014119-116 Rizwan Saleem 21014119-111
- 3. 01 INTROto INFlation Defining Inflation and its Basics 02 TypesofInflation Exploring Various Forms of Inflation 03 CausesofInflation Delving Into Inflation's Root Causes 04 Effect ofInflation Understanding Inflation's Broad Impacts Topicstobe discussed
- 4. "Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair." —SamEwing
- 5. 01. IntRoTo INFLation Defining Inflation and its Basics
- 6. INflation Inflation is the rate at which price of goods and services increase which can be translated as the decline of Purchasing Power over time. Inflation is typically measured as a percentage change in a price index, such as the Consumer Price Index (CPI) or the Producer Price Index (PPI). Introto Inflation FORMULA: Percent Inflation Rate = (Final CPI or PPI Index Value / Initial CPI or PPI Value ) x 100
- 7. Exampleof inflation In the year ONE the price of some goods are here: • Price of a biscuit: $2.00 • Price of a gallon of milk: $3.00 • Price of a movie ticket: $10.00 After One Year the prices are: • Price of a biscuit: $2.04 • Price of a gallon of milk: $3.06 • Price of a movie ticket: $10.20 In this example, the prices of goods and services have increased by 2% over the course of one year.
- 8. 02. Typesof INFLation Exploring Various Forms of Inflation
- 9. Typesof Inflation There are mostly two types of Inflation: • Demand-Pull Inflation • Cost-Push Inflation TypesofInflation
- 10. Demand-PullInflation When demand for goods or services rises faster than the supply of those goods and services, the result is demand-pull inflation. Demand-pull inflation is when there is an increase in demand, and the supply remains the same or decreases. When supply cannot meet growing demand, prices for goods and services are pulled higher. Typesof Inflation Real LifeExample: Mask during the COVID-19 pandemic.
- 12. CostPushInflation Arises when the costs of production increase, leading producers to raise prices to maintain their profit margins. This can be caused by factors such as increased costs of raw materials or labor. TypesofInflation Real LifeExample: A great example is oil, gasoline and the Organization of Petroleum Exporting Countries (OPEC).
- 13. 03. Causesof INFLation Delving Into Inflation's Root Causes
- 14. CausesofInflation Here are some factors that causes inflation • Built-In Inflation (Wage-Price Spiral) • Monetary Inflation • Supply Shock • Imported Inflation Causesof Inflation
- 15. Built-InInflation(Wage-PriceSpiral) Also known as wage-price inflation, this occurs when workers demand higher wages, and businesses, in turn, raise prices to cover the increased labor costs. The cycle continues as higher prices lead to further wage demands, creating a feedback loop. Causesof Inflation MonetaryInflation: Monetary inflation is often associated with an increase in the money supply. If the central bank prints more money or conducts expansionary monetary policies, there can be more money chasing the same amount of goods and services, leading to a decrease in the purchasing power of money.
- 16. SupplyShock: External factors such as natural disasters, geopolitical events, or disruptions to the supply chain can lead to a sudden decrease in the supply of certain goods. When supply is constrained, prices tend to rise. Causesof Inflation ImportedInflation: Changes in the prices of imported goods and commodities can impact the overall price level in an economy. If a country relies heavily on imports and the prices of those imports increase, it can contribute to inflation.
- 18. EffectsofInflation Here are some factors that effect the inflation • Decreased Purchasing Power • Uncertainty and Planning Challenges • Interest Rate Adjustments • International Competitiveness • Impact on Savers and Borrowers Effectsof Inflation
- 19. DecreasedPurchasingPower: One of the most direct effects of inflation is a decrease in the purchasing power of money. As prices rise, each unit of currency buys fewer goods and services. This can reduce the standard of living for individuals, especially if their incomes do not keep pace with inflation. Effectsof Inflation UncertaintyandPlanningChallenges: High or unpredictable inflation can create uncertainty in the economy. Businesses may find it challenging to plan for the future, set prices, and make long-term investment decisions. Consumers may also struggle to plan for their future expenses.
- 20. InterestRateAdjustments: Central banks often respond to inflation by adjusting interest rates. If inflation is high, central banks may raise interest rates to cool down economic activity and reduce inflationary pressures. On the other hand, lower interest rates may be used to stimulate economic activity in times of low inflation. Effectsof Inflation InternationalCompetitiveness: Inflation can affect a country's international competitiveness. If inflation is higher in one country compared to its trading partners, the country's exports may become more expensive, potentially impacting trade balances.
- 21. ImpactonSaversandBorrowers: Inflation can have contrasting effects on savers and borrowers. Savers may see the real value of their savings erode if interest rates do not keep pace with inflation. Borrowers, on the other hand, may benefit from lower real interest rates. Effectsof Inflation
- 22. THANK YOU Design by @amad