Inflation and its indicators

Inflation (“inflation” - from the Italian word “inflatio”, which means “inflation”) is a steady trend of growth in the general level of prices.

The following words are important in this definition:

1. sustainable, which means that inflation is a long-term process, a stable trend, and therefore should be distinguished from a price jump;
2. general price level. This means that inflation does not mean an increase in all prices in the economy. Prices for individual goods can behave differently: increase, decrease, or remain unchanged. It is important that the general price index increases, i.e. GDP deflator.

The process opposite to inflation is deflation - a stable tendency towards a decrease in the general price level. There is also the concept of disinflation, which means a decrease in the rate of inflation.

The main indicator of inflation is the rate (or level) of inflation, which is calculated as the percentage ratio of the difference between the price levels of the current and previous year to the price level of the previous year:

where P t is the general price level (GDP deflator) of the current year, and P t – 1 is the general price level (GDP deflator) of the previous year. Thus, the inflation rate indicator characterizes not the growth rate of the general price level, but the growth rate of the general price level.

An increase in the price level leads to a decrease in the purchasing power of money. Purchasing power (value) of money refers to the number of goods and services that can be purchased with one monetary unit. If the prices of goods rise, the same amount of money can buy fewer goods than before, so the value of money falls.

Types of inflation

Depending on the criteria, different types of inflation are distinguished. If the criterion is the rate (level) of inflation, then we distinguish: moderate inflation, galloping inflation, high inflation and hyperinflation.

Moderate inflation is measured in percentage per year, and its level is 3-5% (up to 10%). This type of inflation is considered normal for a modern economy and is even considered an incentive to increase output.

Galloping inflation is also measured in percentage per year, but its rate is in double digits and is considered a serious economic problem for developed countries.

High inflation is measured in percent per month and can reach 200-300% or more percent per year (note that the “compound interest” formula is used to calculate inflation for the year), which is observed in many developing countries and countries with economies in transition.

Hyperinflation, measured in percentages per week and even per day, the level of which is 40-50% per month or more than 1000% per year. Classic examples of hyperinflation are the situation in Germany in January 1922-December 1924 when the rate of increase in the price level was 1012 and in Hungary (August 1945 - July 1946), where the price level over the year increased 3.8 * 1027 times with an average monthly increase of 198 times.

If the criterion is the forms of manifestation of inflation, then a distinction is made between explicit (open) inflation and suppressed (hidden) inflation.

Open (explicit) inflation is manifested in the observed increase in the general price level.

Suppressed (hidden) inflation occurs when prices are set by the state, and at a level lower than the equilibrium market level (established by the relationship between supply and demand on the goods market) (Fig. 1). The main form of hidden inflation is the shortage of goods.

PM is the equilibrium market price at which demand is equal to supply, PG is the price set by the state, YS is the amount of total output (the amount of products that are produced and offered for sale by producers), YD is the amount of aggregate demand (the amount of products that people would like to buy consumers). The difference between YD and YS is nothing but deficiency. The main form of manifestation of hidden inflation is the shortage of goods. Deficit serves as a form of manifestation of inflation, since one of the characteristic features of inflation is a decrease in the purchasing power of money. Scarcity means that money has no purchasing power at all, since a person cannot buy anything with it.

Causes of inflation

There are two main causes of inflation:

1) an increase in aggregate demand and 2) a reduction in aggregate supply. In accordance with the reason that determined the increase in the general price level, two types of inflation are distinguished: demand inflation and cost-push inflation.

If the cause of inflation is an increase in aggregate demand, then this type is called demand-pull inflation.

An increase in aggregate demand can be caused either by an increase in any of the components of aggregate spending (consumption, investment, government and net exports) or by an increase in the supply of money.

Most economists (especially representatives of the school of monetarism) consider the main cause of demand-side inflation to be an increase in the money supply (money supply), arriving at this conclusion from an analysis of the equation of the quantity theory of money (also called the equation of exchange or Fisher's equation). As the head of monetarism, the famous American economist and Nobel Prize laureate Milton Friedman noted: “Inflation is always and everywhere a purely monetary phenomenon.”

Let us recall the equation of the quantitative theory of money: M*V = P*Y, where M (money supply) is the nominal supply of money (the mass of money in circulation), V (velocity of money) is the velocity of circulation of money (a value that shows how much turnover on average per year is made by one monetary unit, for example, 1 ruble, 1 dollar, etc., or how many transactions one monetary unit serves on average per year), P (price level) - price level and Y(yield) - real output (real GDP).

The product of the price level and the value of real output (P * Y) represents the value of nominal output (nominal GDP). The velocity of circulation of money practically does not change and is usually considered a constant value, therefore an increase in the supply of money, i.e. growth of the left side of the equation leads to growth of its right side. An increase in the money supply leads to an increase in the price level both in the short term (since, in accordance with modern concepts, the aggregate supply curve has a positive slope) (Fig. 2.(a)), and in the long term (to which the vertical aggregate supply curve corresponds) (Fig. . 2.(b)). Moreover, in the short term, inflation is combined with an increase in real output, and in the long term, real output does not change and is at its natural (potential) level.

In the long term, the principle of money neutrality manifests itself, meaning that changes in the money supply do not affect real indicators (the value of real output did not change and remained at the level Y*) (Fig. 2.(b)) .

The exchange equation can be represented in tempo notation (for small changes in its constituent quantities):

where (deltaМ/М x 100%) is the growth rate of the money supply, usually denoted m, (deltaV/V x 100%) is the growth rate of the velocity of money circulation, (deltaP/P x 100%) is the growth rate of the price level, i.e. e. inflation rate pi, (deltaY/Y x 100%) – growth rate of real GDP, denoted by g.

Since it is assumed that the velocity of circulation of money practically does not change, then rearranging the equation, we obtain: pi = m – g, i.e. the inflation rate is equal to the difference in the growth rates of the money supply and real output. From this we can draw a conclusion, which is called the “monetary rule”: in order for the price level in the economy to be stable, the government must maintain the growth rate of the money supply at the level of the average growth rate of real GDP.

The question arises: why do governments (especially in developing countries and countries with economies in transition) increase the supply of money, imagining the negative consequences of this process? The fact is that money is issued in order to finance the state budget deficit, which explains the increase in the growth rate of the money supply and the main reason for high inflation in developing countries and countries with economies in transition.

If inflation is caused by a decrease in aggregate supply (which occurs as a result of an increase in costs), then this type of inflation is called cost-push inflation. Cost inflation leads to the situation of stagflation that we already know - a simultaneous decline in production and an increase in the price level (Fig. 3.)

As a result of the combination of demand inflation and cost inflation, an inflationary spiral occurs (Fig. 4). Suppose that the central bank increases the supply of money, which leads to an increase in aggregate demand. The aggregate demand curve AD1 shifts to the right until AD2. As a result, the price level rises from P1 to P2, and since the wage rate remains the same (eg W1), real incomes fall (real income = nominal income/price level, so the higher the price level, the lower real incomes). Workers demand an increase in wage rates in proportion to the increase in the price level (for example, to W2). This increases firms' costs and causes the aggregate supply curve SRAS1 to shift leftward and upward to SRAS2. The price level will increase to P3. Real incomes will decline again (W2/P3

Workers will again begin to demand higher nominal wages. Workers usually initially perceive its increase as an increase in real wages and increase consumer spending. Aggregate spending increases, the aggregate demand curve shifts to the right to AD3, and the price level rises to P4. At the same time, firms' costs increase, and the aggregate supply curve shifts upward to the left to SRAS3, which causes an even greater increase in the price level to P5.

The fall in real incomes leads to the fact that workers again begin to demand higher wages and everything repeats itself again. The movement follows a spiral, each turn of which corresponds to a higher price level, i.e. higher inflation rate (from point A to point B, then to point C, then to point D, then to point F, etc.). Therefore, this process is called an inflationary spiral or a wage-price spiral. An increase in the price level provokes an increase in wages, and an increase in wages leads to an increase in the price level.

– incomplete closure of the foramen ovale in the interatrial septum, which normally functions during the embryonic period and closes in the first year of the child’s life. An open foramen ovale can be manifested by cyanosis of the nasolabial triangle, slow physical development, shortness of breath and tachycardia, sudden fainting, headache, frequent acute respiratory viral infections and bronchopulmonary diseases. Diagnosis of an open foramen ovale includes an ECG (at rest and after exercise), conventional and Doppler echocardiography, radiography, and probing of the cardiac cavities. With an open foramen ovale, anticoagulant therapy can be used, and, if necessary, surgical treatment (endovascular occlusion of the defect).

General information

Patent foramen ovale is a congenital communication between the right and left atria, representing a residual element of the foramen ovale of the fetal heart. The interatrial foramen with a valve is formed in utero and is a necessary condition for the functioning of the cardiovascular system during this period of development. Thanks to the open foramen ovale, part of the placental, oxygenated blood flows from the right atrium to the left, bypassing the undeveloped, non-functioning lungs, and ensures normal blood supply to the neck and head of the fetus, the development of the brain and spinal cord.

In healthy full-term children under normal developmental conditions, the patent foramen ovale usually closes and ceases to function within the first 12 months after birth. But its closure occurs individually for each person: on average, by the age of 1 year, the oval window remains open in 40-50% of children. The presence of an open foramen ovale after 1-2 years of a child’s life is classified as minor anomalies of cardiac development (MARS syndrome). In mature patients, a patent foramen ovale is detected in approximately 25-30% of cases. The fairly high prevalence of patent foramen ovale determines the relevance of this problem in modern cardiology.

Causes of a patent oval window

All children are born with a patent foramen ovale. After the first independent breath, the newborn’s pulmonary circulation turns on and begins to fully function, and there is no need for an open foramen ovale. An increase in blood pressure in the left atrium compared to the right leads to the closure of the oval window valve. In most cases, the valve closes tightly and is completely overgrown with connective tissue - the open oval window disappears. Sometimes the hole closes partially or does not close at all, and under certain conditions (during excessive coughing, crying, screaming, tension in the anterior abdominal wall), blood is discharged from the right atrial chamber to the left (functioning oval window).

The reasons for incomplete closure of the oval window are not always clear. It is believed that a hereditary predisposition, prematurity, congenital heart defects, connective tissue dysplasia, exposure to adverse environmental factors, smoking and alcohol consumption by a woman during pregnancy can lead to an open foramen ovale. Due to genetic characteristics, the diameter of the valve may be smaller than the diameter of the oval opening, which will prevent its complete closure.

A patent foramen ovale may be accompanied by congenital defects of the mitral or tricuspid valves, or a patent ductus arteriosus.

Risk factors for the opening of the oval window valve may include significant physical activity in athletes involved in weightlifting, wrestling, and athletic gymnastics. The problem of an open foramen ovale is especially pressing for divers and divers who dive to significant depths and have a 5 times higher risk of developing decompression sickness. In patients with thrombophlebitis of the lower extremities or pelvis with a history of episodes of pulmonary embolism, contraction of the pulmonary vasculature can cause increased pressure in the right side of the heart and the appearance of a functioning patent foramen ovale.

Features of hemodynamics with an open oval window

The open foramen ovale is located at the bottom of the oval fossa on the inner left wall of the right atrium, often has a small size (about the size of a pinhead) and a slit-like shape. The size of a patent oval window averages 4.5 mm, but can reach 19 mm. An open foramen ovale, in contrast to an atrial septal defect, has a valve structure that ensures the variability of interatrial communication and the ability to discharge blood in only one direction (from the pulmonary circulation to the large one).

The clinical significance of a patent foramen ovale is controversial. A patent foramen ovale may not cause hemodynamic disturbances and may not have a negative impact on the patient’s health due to its small size and the presence of a valve that prevents blood from shunting from left to right. Most people with a patent foramen ovale are unaware of this anomaly and lead normal lives.

The presence of a patent foramen ovale in patients with primary pulmonary hypertension is considered prognostically favorable in terms of life expectancy. However, excess pressure in the right atrium compared to the left when the foramen ovale is open leads to the periodic occurrence of a right-to-left shunt, which allows a certain volume of blood to pass through and leads to hypoxemia, transient cerebrovascular accidents (TIA), and the development of life-threatening complications: paradoxical embolism, ischemic stroke , myocardial infarction, kidney infarction.

Symptoms of an open oval window

A patent oval window has no specific external manifestations; in most cases it occurs latently, and can sometimes be accompanied by scanty symptoms. Indirect signs of an open oval window may be: severe pallor or cyanosis of the skin in the area of ​​the lips and nasolabial triangle during physical stress (crying, screaming, coughing, straining, bathing a child); tendency to frequent colds and inflammatory bronchopulmonary diseases; slower physical development of the child (poor appetite, insufficient weight gain), low endurance during physical activity, combined with symptoms of respiratory failure (shortness of breath and tachycardia); sudden fainting and symptoms of cerebrovascular accident (especially in young patients, with varicose veins, thrombophlebitis of the lower extremities and pelvis).

Patients with a patent foramen ovale may experience frequent headaches, migraines, postural hypoxemia syndrome - the development of shortness of breath and a decrease in arterial blood oxygen saturation in a standing position with improvement when moving to a horizontal position. Complications of a patent oval window occur rarely. Paradoxical embolism of cerebral vessels, aggravating this anomaly, is characterized by the sudden development of neurological symptoms and a fairly young age of the patient.

Diagnosis of an open oval window

Studying the medical history and physical examination of the patient often does not immediately allow one to determine the presence of an open foramen ovale, but can only assume the possibility of this anomaly of the interatrial septum (cyanosis of the skin, fainting, frequent acute respiratory viral infections, developmental delay in the child). Auscultation helps identify the presence of a heart murmur as a result of abnormal shunting of blood from a higher-pressure chamber to a lower-pressure chamber.

To establish an accurate diagnosis of an open foramen ovale, instrumental studies and visualization methods are used: ECG (at rest and after exercise), conventional and Doppler echocardiography, chest radiography, probing of the cardiac cavities.

When the foramen ovale is open, changes appear on the electrocardiogram indicating an increased load on the right parts of the heart, especially on the right atrium. In older people with a patent foramen ovale, radiological signs of enlargement of the right chambers of the heart and an increase in blood volume in the vascular bed of the lungs may be detected.

In newborns and young children, transthoracic two-dimensional echocardiography is used, which makes it possible to visually determine the presence of an open oval window and its diameter, obtain a graphic image of the movements of the valve leaflets over time, and exclude an atrial septal defect. Doppler echocardiography in graphical and color mode helps to clarify the presence and size of an open oval window, to identify turbulent blood flow in the area of ​​the oval foramen, its speed and the approximate volume of the shunt.

In older children, adolescents and adults, a more informative transesophageal echocardiography, supplemented by a test with bubble contrast and a test with straining (Valsalva maneuver), is used to diagnose a patent foramen ovale. Bubble contrast improves the visualization of the open oval window, allows you to determine its exact dimensions, and assess the pathological blood shunt.

The most informative, but more aggressive method for diagnosing an open foramen ovale is cardiac catheterization, which is performed immediately before surgical treatment in a specialized cardiac surgery hospital.

Patients with varicose veins, thrombophlebitis, cerebrovascular accident, chronic lung diseases, who are at risk of developing paradoxical embolism, must be examined for the presence of an open foramen ovale.

Treatment of open oval window

With an asymptomatic course, a patent oval window can be considered a normal variant. Patients with a patent foramen ovale and a history of a transient ischemic attack or stroke are prescribed systemic therapy with anticoagulants and antiplatelet agents (warfarin, acetylsalicylic acid) to prevent thromboembolic complications. The method for monitoring anticoagulant therapy is the international normalized ratio (INR), which should be in the range of 2-3 when the foramen ovale is open.

The need to eliminate a patent foramen ovale is determined by the volume of shunted blood and its effect on the functioning of the cardiovascular system. If there is a small discharge of blood, there are no concomitant pathologies and complications, surgery is not required.

In case of pronounced pathological discharge of blood from the right atrium to the left, low-traumatic X-ray endovascular occlusion of the open foramen ovale is performed. The operation is carried out under X-ray and echocardioscopic control using a special occluder, which, when opened, completely plugs the hole.

Prognosis of open oval window

For patients with a patent foramen ovale, regular monitoring by a cardiologist and echocardiography are recommended. Endovascular occlusion of the patent foramen ovale allows patients to return to their normal rhythm of life without restrictions. In the first 6 months after surgical treatment of an open oval window, antibiotics are recommended to prevent the development of bacterial endocarditis. The greatest effect from endovascular closure of the patent foramen ovale is observed in patients with platypnea who had a pronounced right-to-left shunt.

The news of an open foramen ovale in the heart alarms and worries many parents of children of different ages. As a rule, they learn about this diagnosis completely by accident: during a routine examination or an ECG. In some cases, such an anomaly in the development of the heart does not manifest itself at all, and people live for many years without experiencing any inconvenience until serious ones appear.

In recent years, this feature in the structure of the heart has begun to be detected much more often, and in our article we will tell you about an open foramen ovale in the heart and the dangers that this diagnosis may pose in the future.

What is a patent foramen ovale in the heart?

During the first cry of a newborn, the oval window in the heart closes.

The oval window is an open gap in the wall between the right and left atria, which normally functions in the embryonic period and completely closes after 12 months of life. On the left atrium side, the opening is covered by a small valve, which is fully mature by the time of birth.

During the first cry of the newborn and the moment the lungs open, there is a significant increase in pressure in the left atrium and, under its influence, the valve completely closes the oval window. Subsequently, the valve adheres tightly to the wall of the interatrial septum and the gap between the right and left atria closes.

In most cases, in 40-50% of children, such “accretion” of the valve occurs in the first year of life, less often - by the age of five. If the valve size is insufficient, the gap cannot close completely and the right and left atria are not isolated from each other. In such cases, the child may be diagnosed with a patent foramen ovale in the heart (or MARS syndrome). This condition is classified by cardiologists as a minor anomaly of the development of the heart, and, in the absence of severe symptoms affecting the quality of life, can be perceived as an individual feature of the structure of the heart.

An open foramen ovale in the heart is a through hole between the atria through which blood can be pumped from one atrium into another during contraction of the heart muscle.

In adult patients, this anomaly is detected in approximately 30% of cases. It is a channel, or shunt, between the atria and can cause problems in the functioning of the cardiovascular system or lungs due to changes in blood pressure.

Reasons

The most common cause of non-closure of the fissure between the atria is a genetic predisposition. In most cases, this anomaly is inherited through the maternal line, but can also be caused by a number of other reasons:

• prematurity of the child;
• connective tissue dysplasia;
• congenital heart defects;
• drug addiction or mothers;
• smoking during pregnancy;
• toxic poisoning from certain medications during pregnancy;
• stress;
• insufficient nutrition of a pregnant woman;
• unfavorable environment.

A patent foramen ovale is often detected with other heart defects: with open and congenital defects of the tricuspid and valves.

Various risk factors can contribute to the opening of the oval window:

• excessive physical activity (weightlifting and gymnastics, strength sports, diving);
• episodes of pulmonary embolism in patients with pelvic or

Symptoms

More often, an open foramen ovale in the heart does not manifest itself in any way, or makes itself felt only by scanty and nonspecific symptoms.

Young children with this anomaly may experience:

• blueness or sharp pallor of the circumlabial area or nasolabial triangle during straining, screaming, crying, coughing or bathing;
• tendency to bronchopulmonary diseases;
• slow weight gain.

Older children may have poor exercise tolerance, which manifests itself by increased heart rate and.

During puberty or during pregnancy, when a total hormonal change occurs in the body, provoking an increase in the load on the cardiovascular system, a patent foramen ovale can manifest itself in frequent episodes and, rapid fatigue and sensations of interruptions in the functioning of the heart. These manifestations are especially pronounced after intense physical activity. In some cases, such an anomaly in the development of the heart can lead to sudden and unmotivated fainting.

Non-closure of the oval window before the age of five indicates that, most likely, this anomaly will accompany the person throughout his life. At a young age and in the absence of cardiovascular lesions, it has practically no effect on his well-being and work activity, but after 40-50 years and the development of heart or vascular diseases, the oval window can aggravate the course of these ailments and complicate their treatment.

Diagnostics

When auscultating heart sounds, the doctor may suspect a patent foramen ovale, since this anomaly is accompanied by systolic murmurs of varying intensity. To confirm this diagnosis, the patient is recommended to use more accurate instrumental examination methods:

• Echo-CG (conventional and Doppler, transesophageal, contrast);
• radiography.

Invasive and more aggressive diagnosis of an open oval window is resorted to if surgery is necessary. In such cases, patients are prescribed probing of the cavities of the heart.

Treatment

If there are no signs of decreased heart function, a child with a patent foramen ovale is cared for as if he were healthy, without the use of medications.

The volume of treatment is determined by the severity of the symptoms of an open oval window. In the absence of pronounced disturbances in the functioning of the heart, the patient is given. Taking medications in the asymptomatic course of such an anomaly of the heart structure is not prescribed, and the patient is recommended to undergo restorative procedures (physical therapy, hardening and sanatorium-resort treatment).

If a patient has minor complaints about the functioning of the cardiovascular system, it may be recommended to take vitamin preparations and products that provide an additional restorative effect on the heart muscle (Panangin, Magne B6, Elcar, Ubiquinone, etc.). In such cases, the patient must adhere to greater restrictions in physical activity and pay attention to general strengthening procedures.

If symptoms are more pronounced, there is a high risk of thrombus formation and there is a significant discharge of blood from one of the atria to the other, the patient is recommended to be monitored by a cardiologist and cardiac surgeon and the following measures may be prescribed:

• taking antiplatelet agents and anticoagulants (to prevent blood clots);
• endovascular treatment (through a catheter, which is inserted into the femoral artery and advanced into the right atrium, a patch is applied to the oval window, it stimulates the opening to close with connective tissue and resolves on its own after a month).

In the postoperative period, the patient is prescribed antibiotics for prophylaxis. Endovascular treatment of such an anomaly in the development of the heart wall allows patients to return to an absolutely full life without any restrictions.

Possible complications

Complications of patent oval window develop quite rarely. This abnormal structure of the heart wall leads to the following diseases:

• kidney infarction;
• transient cerebrovascular accident.

The cause of their development is paradoxical embolism. Although this complication is quite rare, the patient should always inform their doctor about the presence of a patent foramen ovale.

Forecasts

In the vast majority of cases, the prognosis for patients with a patent foramen ovale is favorable and rarely results in complications.

• constant monitoring by a cardiologist and echo-CG control;
• refusal of extreme sports and those involving significant physical activity;
• restrictions in the choice of professions associated with significant respiratory and cardiac stress (divers, firefighters, astronauts, pilots, etc.).

Surgical treatment for such an anomaly of heart development is prescribed only in cases of severe disturbances in the functioning of the cardiovascular system and lungs.

Depending on the degree of government intervention in the sphere of commodity-money relations, open and suppressed inflation are distinguished.

Open inflation is characteristic of countries with a market economy, where there is a free interaction between supply and demand and the excess of demand over supply leads to rising prices. Open inflation is characterized by a constant increase in prices. This is due to the mechanism of adaptive inflation expectations, demand inflation, cost inflation, and tax inflation. Seeing constantly rising prices, consumers increase demand at the expense of savings. Moreover, the continuing rise in prices confirms the correctness of their decisions and makes adaptive expectations more stable. Excessive demand leads to a reduction in savings, which affects the volume of credit resources, and this, in turn, slows down the growth of investment, and therefore the growth of supply, further aggravating the situation.

The basis of open inflation is the wage-price spiral. Raising prices inevitably leads to higher wages in order to maintain the welfare of workers and prevent a fall in their real incomes. And an increase in wages leads, in turn, to a further increase in demand, an increase in production costs and, as a consequence, an increase in prices. The rise in prices of goods and services requires another revision of wage rates. An inflationary spiral is unfolding, which is becoming more and more difficult to stop with each new round.

The development of open inflation is facilitated by the state establishing high tax rates on profits. Entrepreneurs have difficulty investing; they often prefer to invest money in a bank rather than in production, which leads to a decrease in the volume of production of goods and services, an imbalance of supply and demand, and rising prices. In turn, entrepreneurs can respond to tax increases by raising prices.

Based on the above, we can conclude that open inflation is characterized by:

• - imbalance between aggregate demand and aggregate supply;
• - constant increase in prices;
• - the action of the mechanism of adaptive inflation expectations of demand and cost inflation, tax inflation.

Open inflation distorts the market, but it is less dangerous and curable with the help of government anti-inflationary measures.

Suppressed inflation is characteristic of an economy in which there is strict control over prices and incomes, which prevents inflation from manifesting itself openly in rising prices. Externally, prices do not change, but the amount of money in circulation has increased, which will naturally lead to an imbalance between the money supply and its commodity coverage.

Suppressed inflation is characterized by the establishment of strict controls over prices and incomes, temporary freezing of prices and incomes and, as a consequence, commodity shortages. Since price incentives do not work, investment volumes are reduced, production is reduced, and therefore supply is reduced. Suppressed inflation manifests itself in shortages of goods and services. The weakening dependence of prices on demand deprives entrepreneurs of the opportunity to correctly identify and direct investments.

Often the distribution of labor, material and financial resources is not optimal, and there remains a persistent underproduction of goods in demand. A chronic shortage of goods gives rise to another surge in demand, and the greater the deficit, the greater the size of current demand, which makes suppressed inflation sustainable.

Suppressed inflation is characterized by:

• - establishing strict control over prices and incomes;
• - temporary freezing of prices and incomes;
• - constant shortage of goods and services.

Suppressed inflation is more dangerous: while open inflation distorts the market, suppressed inflation destroys it.

Suppressed inflation can only be stopped with maximum permissible price freedom.

The types of inflation considered do not exhaust their diversity. Depending on the rate of price growth, the following types of inflation are distinguished:

• - moderate inflation - prices rise by less than 10% per year, the purchasing power of money is maintained. As practice has shown, with moderate inflation the economy can develop normally;
• - galloping inflation - average annual price growth rate of 10-100%. Money materializes quickly. This inflation is dangerous for the economy and requires anti-inflationary measures;
• - hyperinflation - prices rise quickly, the discrepancy between prices and wages becomes catastrophic, the level of well-being falls, large enterprises become unprofitable, money tends to be converted into goods, a transition to barter exchange takes place. It is almost impossible to conduct business in these conditions; the main task is to survive by simplifying production, reducing external relations, and switching to natural exchange.

From the point of view of balancing prices for various groups of goods, a distinction is made between balanced and unbalanced inflation. With balanced inflation, the prices of various goods relative to each other do not change. Balanced inflation is not very dangerous even for small businesses. The risk of loss of income is not great. Unbalanced inflation is characterized by a constant change in the prices of various groups of goods relative to each other. It is very dangerous for business, fraught with high costs of the adaptation plan and does not make it possible to predict the future of the business.

Since it is difficult to predict that product groups that are leaders in price growth will remain leaders in the future, it is impossible to determine more profitable areas for investing capital and to calculate the profitability of various investment options.

Depending on the state’s ability to predict inflation, a distinction is made between predictable and unpredictable inflation.

Projected inflation is inflation that is taken into account in the expectations and behavior of the population; it is inflation for which the population is more or less prepared.

If the country's population assumes that inflation this year will be 12%, then nominal and real interest rates, rents, and wage growth will be adjusted upward by 12%.

Adjustment of nominal income can be carried out taking into account the Fisher equation i = r - r, where i, r are the nominal and real interest rates, p is the level of expected inflation.

At inflation rates > 10%, the Fisher equation looks like:

inflation demand supply consequence

With inflation projected as shown above, income earners can take steps to reduce the negative effects of inflation on income.

Projected inflation does not have such a detrimental effect on economic efficiency or the distribution of income and wealth. The price in this case is only a signal by which economic entities adjust their behavior. But it leads to an increase in the inflation tax, a decrease in efficiency in its pure form, an increase in the average amount of cash, a reduction in real balances, and an increase in demand for durable goods.

Projected inflation dictates the need for constant revision of prices, leading to incorrect allocation of resources due to the impact of inflation on the tax system.

Unpredicted inflation is inflation that was unexpected for the population or appeared when the population did not have time to adapt to it.

Instability in the development of inflation complicates forecasting price levels and interest rates even in the near future. If the instability of both the level and fluctuations of inflation increases, it becomes even more unpredictable.

In conditions of unpredictable inflation, there is a redistribution of wealth from creditors to debtors. And since the creditors are most often households, they suffer losses, while firms and the state benefit. Unpredicted inflation leads to a redistribution of income between different segments of the population, this is due to the reaction of wages to rising prices.

Unpredictable inflation leads to declines in all types of fixed income. Those economic agents whose nominal incomes increase faster than the average price level find themselves in a better position.

Governments that have accumulated significant public debt often pursue policies to stimulate short-term inflation, which contribute to the relative depreciation of debt.

If economic agents have diversified sources of income, then they can simultaneously “win” and “lose” in conditions of rising inflation.

Many economists and theorists highlight gradual and rapid inflation. Gradual inflation refers to inflation, which manifests itself in an increase in the price level by two, three, five percent per year for a long time. Moreover, it should be noted that with gradual inflation, not only the scale of growth is low, but also the rhythm of inflationary price increases.

In addition, prices for some goods may rise, while others remain stable; For some goods prices rise faster, for others - slower.

A situation may arise in the economy. When an increase in the general price level occurs with a simultaneous reduction in production. The state of the economy, which is characterized by a simultaneous rise in prices and a decrease in production, is called stagflation.

The reasons for this phenomenon are various. Firstly, a reduction in supply associated with rising costs, i.e. cost inflation. Secondly, the structural imperfection of the market, the power of monopolies in the market, the lack of competition. Third, inflation expectations.

Depending on the criteria, different types of inflation are distinguished.
If the criterion is the rate (level) of inflation, then the following are distinguished:
moderate (creeping, slow) inflation,
galloping (fast, strong) inflation,
hyperinflation.
Moderate inflation is measured in percentage per year, and its level is 3-5% (up to 10%). An inflation rate of 3-4% per year is considered normal for a modern economy, is considered an incentive to increase output and is called the “natural rate of inflation”;
The cost of money remains almost stable, there is no risk of signing contracts at nominal prices. This kind of inflation is inherent in most countries with developed market economies. Natural inflation rates are most typical in the United States and Western Europe, where inflation rates are around 3%.
Galloping inflation, also measured in percentage per year, but its rate is in double digits and is considered a serious economic problem for developed countries, ranging from 10 to 200%. Unlike moderate, it becomes difficult to control.
Hyperinflation, measured in percentages per week and even per day, the level of which is 40-50% per month or more than 1000% per year.
The peculiarity of hyperinflation is that it turns out to be practically uncontrollable:
prices are rising astronomically;
there is a huge discrepancy between prices and wages;
the well-being of even the wealthiest strata of society is being destroyed;
The largest enterprises become unprofitable and unprofitable.
A characteristic sign of hyperinflation is
complete loss of confidence in the national currency: flight from
money, the population seeks to invest it in material assets, barter transactions are widely used;
The “world champion” in terms of the maximum monthly level of hyperinflation is Hungary - 420 trillion. % in 1946, and in duration - Nicaragua, where hyperinflation lasted for 48 months from 1987 to 1991.
Naturally, there cannot be clear boundaries in dividing the types of inflation; this division is approximate.
Moderate inflation? a regularity of modern market economies, even the most prosperous ones. It can become strong under unfavorable circumstances (an increase in military spending, as in Israel during the war with Arab countries, or an increase in prices for imported products, as in the 70s after a multiple increase in oil prices by OPEC countries).
Hyperinflation? a feature of wars and post-war devastation for countries with weak economies (Russia during the civil war, Germany after the First World War), but can also occur in peacetime in countries with a very high share of uncontrolled state economies that are unable to ensure the collection of taxes.
The differences between the above types of inflation are not only quantitative.
Moderate inflation is characterized by minimal additional costs for society, it is usually predictable, it is relatively easy to adapt to, banks maintain a positive real interest rate, and the population can protect most of their savings from depreciation. With moderate inflation, a fairly long process of price reduction for some individual groups of goods may take place.
Galloping inflation, as a rule, is unpredictable with the necessary accuracy and can be characterized by strong differentiation of price indices for various goods and services. Price increases are widespread for all goods and services. A positive bank interest rate, especially on deposits, is not guaranteed. It is very likely that speculative incomes of resellers, based on different price dynamics for different goods and the discrete nature of their changes, will increase. Methods to protect the population from galloping inflation can only strengthen it. Galloping inflation can lead to a noticeable redistribution of current income and national wealth.
Moderate and galloping inflation does not always lead to the need for monetary reforms and denomination of monetary units. Some countries, having experienced galloping inflation and stopped it, did not return to the previous level of prices, enduring a large number of zeros on banknotes and in other documents (Japanese yen, Italian lira).
On the contrary, hyperinflation almost always ends with monetary reform or at least denomination. During hyperinflation, the scale of redistribution of social wealth in a relatively short period of time can be colossal if it is also accompanied by any economic reforms. The most striking example of this is? Russia and some other CIS countries, where over the course of several years a significant part of the national property became concentrated in a small group of private individuals. Without the kind of inflation we had, this would have been impossible. Hyperinflation often leads to the complete collapse of the financial system, the widespread use of foreign currencies, and the expansion of direct product exchange. Some of these phenomena also took place in Russia.
Another criterion is the rise in prices for various product groups.
There are two types:
balanced inflation;
unbalanced inflation;
With balanced inflation, the prices of various goods remain constant relative to each other.
With unbalanced inflation, the prices of various goods constantly change in relation to each other, and in different proportions.
Balanced inflation is not dangerous for enterprises; they only have to periodically increase the prices of goods. For example, raw materials have risen in price 10 times, and you accordingly increase the price of your final products. The risk of loss of profitability is inherent only to those entrepreneurs who are the last in the chain of price increases.
Unbalanced inflation is a big problem for the future. It is impossible to really select areas for investing capital, calculate and compare the profitability of investment options.
The third criterion is the forecast.
There are two types:
expected inflation;
unexpected inflation;
Expected inflation can be predicted in advance.
The unexpected arises spontaneously. No forecast possible.
Many economists believe that moderate, expected and balanced inflation has little impact on economic efficiency and redistribution processes. A much greater danger is unforeseen and unbalanced inflation, especially if it grows at double-digit rates, not to mention hyperinflation.
The fourth criterion is the forms of manifestation of inflation, distinguished: open inflation, suppressed and hidden inflation.
Open inflation is manifested in the observed increase in the general level of
prices . This type of inflation is typical for countries with market economies. Although open inflation seriously distorts the market mechanism, it does not destroy it. It continues to generate price signals that indicate areas for profitable investment of capital, stimulates increased production, and this reflects a downward effect on prices.
Suppressed inflation occurs when prices are set by the state, and at a level lower than the equilibrium market level (set by the relationship between supply and demand on the goods market) (Fig. 1).
The main form of hidden inflation is the shortage of goods. Usually it is characteristic of planned economies (although it does not at all follow from the essence of such). Target prices may not be high enough to balance supply and demand for some goods and services. Hidden inflation can also occur in a capitalist economy during periods of war and after them, when rationed supplies are introduced. In conditions of suppressed inflation, prices are far from real changes, needs and demand. They do not give a signal to production, and in a command economy it is not able to perceive them. After all, the manufacturer is not free to choose where to apply his funds.

PG – price set by the state,
YS is the value of total output (the amount of products produced and offered for sale by manufacturers),
YD is the value of aggregate demand (the amount of products that consumers would like to buy). The difference between YD and YS is nothing but deficiency. The main form of manifestation of hidden inflation is the shortage of goods. Deficit serves as a form of manifestation of inflation, since one of the characteristic features of inflation is a decrease in the purchasing power of money. Scarcity means that money has no purchasing power at all, since a person cannot buy anything with it.
Hidden inflation is characterized by a decrease in the quality of goods and services at a constant price level. Inflation is also affecting the investment sphere; official statistics do not reflect the increase in the level of state retail prices due to an arbitrarily selected consumer basket. A similar situation was typical of the USSR, Bulgaria and Romania in the late 80s of the twentieth century.