What is the inflation and how calculates?

Thus affects the economy of a country and to the pockets of your citizens.
In the current economy, the prices of the goods that acquire or of the services that use usually change with a certain frequency. The inflation makes reference to the increase of the prices of goods and services in a period of time , in other words, the decrease of the value of the money with regard to the amount of goods and services to buy with him. 

What the cause?

The inflation can owe to several factors, as the following ones:

  • The lawsuit that generates is higher than the offer, that is, requires an amount of goods higher than what is able to produce, what does that the prices go up. For example, if only had skills for manufacture a million cell phones a year and the requests arrived to the 2 millions, the price to pay for this product be greater than if, on the other hand, arrived to figure respondent. 
  • The increase of the costs in the production of a good or service go up (for example, for the markup in the price of the raw materials, thanks to work or of the taxes) generates an increase in the selling prices for compensate the markup of the goods or services. For example, if increases the price of the barrel from Brent, also it does the cost of the liter of fuel in the gas stations.
  • Is carried out a self-built inflation. This takes place when, as a precaution against a close and severe rise of the price of one/s goods or services, force an increase gradual of your cost so that the impact is smaller and feasible.
  • Happens an inflation of the monetary base (grows the cash amount legal that happens), what means that is more currency in circulation for spend in goods and services. This generates an increase in the lawsuit that can not be feasible by the suppliers, fact that gives place to an increase in your price.

What types there are?

The inflation can have several types, on the basis of which is possible find different lessons: 

  • Moderate: the price rise is gradual and, usually, not overcomes the yearly 10%.
  • Galopante: the rising prices is very high, in most cases of 2 or 3 digits (15%, 30%, 130%, etc) a year, what does that reduces the purchasing power of the potential consumers, fact that affects directly to the national economy. 
  • Hyperinflation: the prices ascend in an exaggerated way (over 1,000%). This does that the money of a country loses your value giving place to a serious economic crisis. 

Additionally can find other cases more punctual: 

  • Stagflation: the inflation ascends but not it does the national economy (determines as standard if is decrease of GDP during two quarters consecutive). Is one of the worse stages economic possible.
  • Disinflation: decelerates the inflation of a country result of the increase of the prices of the goods and services. This rise, however, is lower that in other periods previous. 
  • Deflation: end held out against inflation, understands as a reduction of the prices of the goods and services (minimum during 2 semesters consecutive) on the occasion of a highest bidder and a smaller lawsuit of the same.

What consequences can have?

The effects that can have the inflation are several: 

  • Depreciation of the value of the currency result of the growth in the price of each good or service. As a result of this, reduces the purchasing power of a population that sees as needs invest more amount for access what wants and that, previously, you were worth far less.
  • Rise of the wages originated for the increase in the costs and on the basis of that the first, in theory, owe adapt always to the price level of the moment.
  • Depreciation of the debts contracted with third parties, given that the cost of the euro in period of inflation is lower than every day that passes. This generates losses for the substantial creditor and benefits for the debtor. 
  • Reduction of the investments in the country since the investors look for a stabler stage and insurance in which spend your money (and in which achieve a great report of the same one). Only see incumbents the investments speculative, that is, those in which assumes a high risk by a registration reward and that, usually, are more harmful in this type of context economic.

How can calculate it?

There is a formula with which be able to obtain the inflation rate, taking as reference a period specific of time and the CPI of the same one. The formula is:

[ (final CPI - CPI initial) / CPI inicial] x 100

This CPI, acrónimo of Consumer price Index, represents the evolution of the price of the goods and services of a country over a year. For example, if a bottle of water voucher an euro to beginning of 2019 and 1.5 euros to end of 2019, this index us shows the percentage of growth of the cost of the above-mentioned product. Your calculation it carries out in National Statistics Institute (INE) on the basis of a shopping basket standard compound, to this day, for 479 items (and 220,000 realized prices of 22,000 accommodated shops in 177 municipalities different).