Types of inflation depend on what factors underlie their classification.
When the criteria are the prevailing causes of inflation, the following types are distinguished:
- production costs;
- demand.
One of the criteria may be the pace at which prices rise in the country's market. In this case, allocate:
1) hyperinflation;
2) creeping;
3) galloping.
1. If prices rise by more than 100 percent, they talk about hyperinflation. It can happen in any country during a fundamental change in the structure of the economy. This phenomenon is temporary.
2. Moderate inflation is typical for advanced economies. There is even considered a stimulating factor, when every year prices rise by no more than 3-4 percent.
3. Galloping inflation occurs when the average annual prices rise by at least 10-15 percent. Sometimes their growth is allowed up to 100 percent. Although not all economists consider such a measurement of inflation of this type as infinitely possible. So, Samuelson argued that galloping inflation per year could reach 200 percent.
It is peculiar to developing countries. Sometimes a different term is used to define rapid inflation - “spasmodic”. It can have different causes of formation. Depending on them, galloping inflation is divided into three subspecies:
1) monetary;
2) demand;
3) costs.
They can appear both together, forming a system, or separately.
Galloping inflation of demand is basic, upward. Its formation is influenced by several factors. But the main thing is the rapid growth in demand taken in aggregate. And it happens subject to the employment of all resources and certain sizes of production. Accompanied by galloping inflation, not physical, but nominal, that is, price growth in production volumes in its totality. In some cases, it can be further enhanced. This happens if in the state the price of resources rises easily and falls just as easily. This is especially true of wages, and hence the cost of labor. Volumes of production at galloping inflation can remain stable and fluctuate only in short periods. As a result, their level is still restored. Currently, this type of inflation can manifest itself only in Western Europe, and then only at the stage of economic recovery. For Russia, in which there are significant fluctuations in production volumes, it is not typical.
The second kind is galloping cost inflation. It is formed in such conditions when prices for resources are growing rapidly and production volumes are falling at the same rate. Galloping cost inflation is one of the main components of general inflation occurring in Russia. It manifests itself during a recession.
The third type is monetary galloping inflation. Its development is affected by the rapid depreciation of the country's monetary unit. Inside it, two more subspecies are distinguished:
- monetary galloping inflation that occurs when both production volumes are full and resources are all occupied, that is, during the economic recovery. For the current stage of development of Russia, it is not characteristic;
- monetary galloping inflation that occurs simultaneously with spasmodic inflation of supply. It is accompanied by a significant drop in production volumes.
The Russian economy at the end of the 20th century was characterized by precisely this inflation. It was especially pronounced in the period from 1993 to 1995. Then, in the next two years, she was crushed, but still not completely overcome.
A large role in its structure is played not by the element that is caused by the depreciation of the national currency, but by the one due to the rising cost of resources.