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News AMEGA

October 10, 2022 in 10:08

Inflation: Public Enemy No1?

There are two causes for inflation, Demand-pull and Cost-push.

Α 2% Economic Inflation level is the ideal condition for any country, as it means economic growth and expansion in both the private and government sector.

Inflation can be beneficial in certain ways:

It can be used as a means to increase Wages.
It keeps deflation (which is the opposite of inflation) away by bursting the economic bubble, which could lead to a recession.
It keeps spending at a constant level, allowing further expansion and investment.

A high Inflation rate, however, can be catastrophic as it can:

Lead to the depreciation of investments and savings
Decrease exports and other international business transactions
Lead to a recession.

At the moment, the world is experiencing a Global rise of Inflation. Geopolitical events are a major contributor, as they affect supply chains and imports/exports of goods and services.