Inflation Rate and Consumer Price Index

Types of inflation

The most common types of inflation are Creeping Inflation, Chronic Inflation, and Hyperinflation.

Creeping inflation (Low to Moderate Inflation)

Most stable nations in the world have to deal with inflation at some level and try to maintain a target inflation rate of around 1-2% but depending on the state of the country’s economy it can reach up to 6%. You could consider this a natural rate of inflation that is almost impossible to eliminate.

Chronic Inflation (High Inflation)

For some industrialized nations and developing nations inflation is high and can continue to increase each year possibly reaching annual rates of 10% to 35% and possibly greater in some places. It is defined as chronic because the high inflation rate persists over time without any downward movement, possibly leading to hyperinflation rate.


The most popular period for Hyper inflation was after World Wars I and II. During these harsh economic times many countries saw extremely high price increases ranging from 15 to 80% year over year. With inflation rates this high prices become ‘out of control’ as the purchasing power of money quickly dwindles. The most outrageous example of Hyperinflation was in Germany during 1923 when the rate of inflation was so high that prices were doubling every 50 hours. The classic story (which is true) during this time was that people were burning money for heat as it was cheaper (and would burn longer) than the wood they would have to purchase.

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