Core Inflation. This is a measure of inflation which excludes certain volatile and seasonal prices. It will be based on the Consumer price index but exclude prices such as Petrol (subject to oil price variations) Food (subject to seasonal variations) Core inflation will also exclude the impact of government excise duties. Core inflation is seen …
Inflation is a situation of rising prices in the economy. A more exact definition of inflation is a sustained increase in the general price level in an economy. Inflation means an increase in the cost of living as the price of goods and services rise. The rate of inflation measures the annual percentage change in …
Definition of disinflation Disinflation is a fall in the inflation rate. It means that the general price level is increasing at a slower rate. When people talk of disinflation, they often mean a period of low inflation. For example, inflation falling below the inflation target of 2%. Between 2011 and 2015, there is a fall …
There is no doubt that as the economy emerged from Covid lockdowns in 2021, the world experienced a surge in inflation, not seen since the 1970s. There are many supply and demand factors, which have caused this unexpectedly high inflation. The first factor is that Covid lockdowns, especially in China and Asia, disrupted global supply …
A recession is a period with a significant decline in economic activity characterised by falling GDP, rising unemployment and a decline in real incomes. A quick and simple definition of a recession (used in the UK and EU) is – negative economic growth for two consecutive quarters. The US uses a more comprehensive definition of …
In theory, there is a strong link between the money supply and inflation. If the money supply rises faster than real output, then prices will usually rise. This means if a Central Bank prints more money, we will often (though not always!) get higher inflation. Explanation of why increased money supply causes inflation The money …
Profit-push inflation is when firms use their market power to put up prices, contributing towards inflation. It is a form of cost-push inflation. Profit-push inflation is sometimes known as ‘greed inflation’ and is related to price gouging. Profit push inflation is not the primary cause of inflation, but it can accelerate existing inflationary pressures. Profit-push …
Definition: Cost-push inflation occurs when we experience rising prices due to higher costs of production and higher costs of raw materials. Cost-push inflation is determined by supply-side factors, such as higher wages and higher oil prices. Cost-push inflation is different to demand-pull inflation which occurs when aggregate demand grows faster than aggregate supply. Cost-push inflation …