101 Concepts for the Level I Exam

Concept 27: Inflation, Hyperinflation, Disinflation & Deflation

  • Inflation is the persistent increase in general price levels over time. The inflation rate refers to the percentage increase in price level over a period.
  • Disinflation refers to the decrease in the inflation rate over time i.e. price levels are increasing at a lower rate (e.g. from 6% to 4%).
  • Deflation is the persistent decrease in general price levels over time.
  • Hyperinflation refers to out of control acceleration of inflation which can destroy a country’s monetary system and bring about social and political upheavals.