Inflation is generally defined as the depreciation of money and an overall and sustained rise in the price level caused by the amount of money in circulation exceeding the actual needs of the economy under the credit money system. According to the degree of price increases can be divided into three main grades: low inflation, high inflation, hyperinflation

In general, low inflation, also known as mild inflation, is a normal economic phenomenon, while generally recognized as hyperinflation for the monthly inflation rate of 50% or more, this often have a fatal blow to the economy.

According to the form of the source of inflation is mainly divided into: monetary overshooting triggered by inflation, demand-pull inflation, cost-push triggered inflation. Among them, inflation caused by currency overissuance, that is, within a certain period of time, the growth rate of currency overissuance is higher than the rate of wealth creation in society, leading to currency depreciation, thus causing a general rise in prices.

Expanded Information

1, currency shrinkage, wealth depreciation: as an example, if you have 1 million deposits in the bank, the deposit interest rate is 2%, but the inflation rate that year is 10%, a year later, although your principal and interest amounted to 1,020,000, but you can buy goods in 1 million 1 year ago, but now it is with 1.1 million dollars to buy it, your currency is devalued.

2, affecting the profits of the upstream enterprises: inflation is coming, the price of raw materials rose, meaning that the upstream enterprises increased costs, operating pressure increased.

3, the economy is at risk of a bubble: under inflation, if the GDP is also increasing, then the economy is facing overheating concerns, when the monetary authorities are likely to fight this risk by raising interest rates, if not handled properly, it is likely to lead to the stock market, the property market, and other asset prices plummeted.