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Different Types of Rate Inflation?

What is Inflation and Impact of Inflation?

Here all the types of Inflation based or classified on the basis of Rate is given in the Layman Terms for best understanding.
According, based on the "Rate of Inflation", it is divided into four types.

i)  Moderate Inflation
ii) Running Inflation

iii) Galloping Inflation
iv) Hyper Inflation.

Moderate Inflation:
Slow rise of prices caused moderate inflation. It is not a server form of inflation. Generally, the rate of inflation is less than 10% annually.  Moderate inflation does not interrupt the balance of economy and expectations are constant.

Further Moderate Inflation is distinguished into two types.
a) Creeping Inflation
b) Walking Inflation

a) Creeping Inflation(Red Line): If the annual rate of inflation is up to 3% it is called creeping Inflation.

b) Walking Inflation(Green Line): If the annual rate of inflation is more than 10% it is called walking inflation. Walking inflation is a warning sign to become running inflation.  Combination of Creeping Inflation and Walking Inflation gives a Moderate Inflation.

ii) Running Inflation(Blue Line):
If the changes in prices occurs rapidly it leads to Running Inflation.  In 10 years, inflation may record increase in prices of 100%.  Range of Running Inflation may be around 10-20% per annum.

iii) Galloping Inflation:
If annual rate of inflation exceeds 20% it results in Galloping Inflation.  The inflation rates may rise to double or triple digits(in percent) per year in Galloping Inflation(Economist: Samuelson).

iv) Hyper Inflation(Yellow Line):
When the prices rise more than 100 percent per year it is called Hyper Inflation.  The prices rise every minute and may rise to above its limits.  This cause difficulty to measure the inflation rate and severe problems to economy like prices of goods become in stable, Wages decrease, inequalities rise, purchasing power of goods becomes weak and worse.  Circulation of money becomes faster.


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