Inflation is a long and relatively continuous increase in prices for all food and non-food products and services. It is the process of depreciating money that results from the overflow of money supply channels.
The consequences that rising prices can lead to the degradation of the national economy, falling production, growing barter transactions, social tensions, and lack of confidence in government, and, of course, slowing economic growth.
The reasons and features of the manifestation of inflation in Russia are as follows:
1) Let’s start with demand inflation, which occurs because there is much money in circulation, and production is still functioning now, i.e., there is no time to respond to sudden changes in demand.
The consequence is an excess of demand overproduction capacity, which causes prices to rise.
2) The following reason for the increase in the money supply is government-led emissions because the federal budget is not enough for government spending.
3) Cost inflation. In it, the growth is accompanied by the fact that production costs are constantly growing, which is mainly seen in the high costs of paying workers’ wages.
Therefore, to maintain the previous price, manufacturers raise the prices of their products. In this case, it is necessary to increase salaries because buying more expensive products requires more money, and this
already entails another increase in product prices, forming a kind of vicious circle.
All of the above can be predicted, given the characteristics of inflation. A similar situation is not expected in Russia at the moment.
Currently, the analysis of inflation in Russia shows that economic growth will slow down significantly in 2013, which will help more effectively control the rise in prices. Now it is 8,39%. Such an increase occurred in 2012, or 0 5% more than in 2011.
Thus, food prices are rising by about 0, 9% per month, and for other goods – by 0, 3%, while services go up by 0, 4%.
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