Inflation means sustained increase in general level of 
prices, so that the given amount of money buys less and 
less. Fixed income people will suffer in case inflation 
increases.

Economists identified two types of inflation:

1. Demand pull: Aggregate demand exceeds than aggregate 
supply and competition for scarce products pushes up their 
price.
2. Cost push: Increase in wages or other costs pushes 
prices up.

In economics, inflation is a rise in the general level of
prices of goods and services in an economy over a period of
time.When the price level rises, each unit of currency buys
fewer goods and services; consequently, inflation is also an
erosion in the purchasing power of money – a loss of real
value in the internal medium of exchange and unit of account
in the economy.A chief measure of price inflation is the
inflation rate, the annualized percentage change in a
general price index over time.

Inflation can have positive and negative effects on an
economy. Negative effects of inflation include: loss in
stability in the real value of money and other monetary
items over time; uncertainty about future inflation may
discourage investment and saving, and high inflation may
lead to shortages of goods if consumers begin hoarding out
of concern that prices will increase in the future. Positive
effects include a mitigation of economic recessions,and debt
relief by reducing the real level of debt.

Inflation means sustained increase in general level of 
prices, so that the given amount of money buys less and 
less. Fixed income people will suffer in case inflation 
increases.

Economists identified two types of inflation:

1. Demand pull: Aggregate demand exceeds than aggregate 
supply and competition for scarce products pushes up their 
price.
2. Cost push: Increase in wages or other costs pushes 
prices up.