Inflation and Friends.

The reality is the cost of living is becoming more expensive, more especially for the poor. The rich are getting richer even though we said to be under a pandemic that is threatening world output. The poor are drowning in debt if not surviving on their own without the bank. It's for this reason why many ask where is this price stability that governors talk about when prices continue to rise. A brief look at inflation, hyper inflation, deflation and stagflation. 

Inflation 

An increase in prices of goods and services in a market. Put more frankly it is the loss of purchasing power of consumers. Inflation is usually caused by consumers demanding to much of a product or service in a market (demand pull inflation) which forces produced to increase prices . In addition, inflation can be caused by producers increasing prices by colluding to control a share of the market and create barriers to entry. The SARB prides itself with its inflation targeting model, as unemployment and inequality continues to rise modern monerty theory say it's not enough to tweak interest rates every six weeks. However, the business sector seems to benefit alot from price stability that comes  with inflation targeting. 

Hyperinflation 

A special case of inflation. Zimbabwe and Venezuela are perfect examples. For example, in Zimbaber an external shock (radical seizure of land without compensation from settlers to natives) to producers that can not be internalized. This resulted in producers abandoning production and living a few producers that will have to charge higher prices for the few goods that are available. Venezuela is said to have printed more money when there was few good, this results in price increase of goods as demand pull inflation gets out of control. Both situation arr definitely bad to be caught in, it can only take good and sound economic policies to maneuver hyperinflation. 

Deflation 

A decrease in prices of goods and services. An increase in consumer purchasing power. This is usually short-lived since there is a threshold to the amount of good and services available in a market before say a new equilibrium is achieved. Prolonged deflation is simply a symptom of a sick economy. A drop in prices usually comes from an increase in suppliers in a market that was formally monopolized. 

Stagflation 

An increase  in prices but out put remains the same or say consumers demand less of the good or service. This is usual for markets with cartels and oligarchs. Not good for the consumers but worth noting in the economy when it happens now and then. 

In conclusion 

Being unable to buy the same number of goods as before keeping consumer pockets constant is inflation. The bank calling you under the pandemic to tell you about house sales is deflation in the property market (please don't create another 2008 crisis). Oil prices acting bullish and bearish indicates stagflation  since price usually overshoot but demand remains or decrease. Lastly, Hyper inflation is buying bread for one rand on a Monday, then coming to find Bread being ten rand on a Wednesday.