concept of galloping inflation



Today there is no single definition of galloping inflation.Some experts mean by her abrupt rise in prices and others - with the growth of inflation by at least 10-20%.And there among economists unified point of view of what is the pace of price growth should be characterized by galloping inflation.Some call numbers of 20%, 50%, 100%.Other economists believe that they can reach 200%.

Galloping inflation falls between moderate and hyperinflation.Moderate inflation - is normal for a market economy, the annual price growth in this case is about 3-5%.In contrast to the moderate inflation, hyperinflation - it is difficult to control.Hyperinflation occurs in times of crisis and in the process of transformation or radical change in the economic structure.It implies a sharp rise in prices is higher t
han 100%.

After galloping inflation held almost all of the state.Often it is accompanied by a crisis in the economy, an indigenous fragile economic structure.In many countries, it is noted in the post-war years (1945-1952 years), another wave of its spread has fallen to 70 years, when sharply increased oil prices.

Characteristics of galloping inflation



Since conventional quantitative criteria by which inflation can be defined as trotting, no, it remains to use the qualitative characteristics of the phenomenon.

feature of runaway inflation is that when there are growing risks of long-term contracts, ascurrency depreciates.Therefore, in this period of the transaction are in a more stable currency, or they laid a potential rise in prices.For example, when runaway inflation in Russia in 90 years the prices of goods and services is indicated in dollars.

Another characteristic of runaway inflation is that its distribution play an important role inflation expectations.This price increase is accompanied by rising costs, which hampers economic growth because of rising costs.

With galloping inflation the population tries to keep its own funds and is committed as soon as possible to convert them into good ways to invest.For example, in real estate or, if inflation is accompanied by a devaluation in the currency.

But the volume of deposits in the national currency with the galloping inflation falls, despite the extremely high interest rates.The banks refuse to lend at a fixed percentage, so the lending market is in a state of stagnation, sinceborrowers prefer not to use such loans.

Can we galloping inflation in Russia?The answer to this question will depend on what kind of graduation stick.If we take as a basis the rate of price increases in 2005 has already been noted with inflation rates above 10%.It is likely that in 2014 it will also be at a high enough level.But deposits remained stable, loans were fixed-rate, so as to form inflation can not be called galloping.