Consequences of inflation

The inflation rate is the speed of price growth: (CPI₁ − CPI₀) : CPI₀ · 100%, where CPI₀ is the consumer price index of the earlier year and CPI₁ of the later year. By the book’s classification, if prices rise up to 10% a year it is creeping (moderate) inflation and from 10% to 50% galloping inflation (these boundaries differ a little between sources); if prices rise by more than 50% a month, it is hyperinflation. The biggest losers from inflation are people with fixed wages, pensions or benefits and those who keep savings in cash, because the purchasing power of their money falls; those who lent money without interest also lose. Under high inflation people rush to turn money into goods, goods become scarce, contracts become unreliable, firms cut production and unemployment rises. Against inflation the state tries to reduce excess money mass (for example, through Central Bank policy) and to stimulate production, because more goods lower prices. The current inflation figure and the target level can be found in official Central Bank data.