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There are many definitions of inflation and the most famous
Is a rise in the prices of goods and services provided, which reduces consumption.
Low purchasing power of the currency with an increase in money traded.
Inflation is divided into several types
Inflation in prices is a strong increase in prices of goods and services.
Monetary inflation is an increase in the currency notes traded.
Income inflation is an increase in wages, which leads to an increase in commodity prices.
Causes of inflation
The reasons for the increase in demand, so that the demand for its goods, and the increased demand for them leads to higher prices.
And the reasons for the increase in costs, where the high costs of manufacturing, raw materials and manual labor leads to high cost, which consequently adversely affect the price of the product or goods to the consumer.
And the reasons for the low interest rates, as low interest rates on the currency encourages consumers to borrow because of low interest, which leads to an increase in consumption and high capacity for production.
Inflation and interest rates
It is worth mentioning that the relationship between inflation and interest rates is an inverse relationship. The higher the interest rate on lending by central banks, the lower the overall inflation, and vice versa the lower the interest rates on lending, the higher the inflation in comparison.
Here are the interest rates and inflation rates of the major economies
State interest rate inflation rate
United States 2.5% 1.5%
China 4.35% 1.5%
United Kingdom 0.75% 1.8%
Euro Zone 0% 1.5%
Germany 0% 1.5%
Australia 1.5% 1.8%
New Zealand 1.75% 1.9%