Ministry of education tashkent financial institute

Figure 1. Pressure (hidden) inflation
However, there are cases when the national currency depreciates and the population cannot afford to buy the products it needs. When hidden inflation occurs in the economy, the growth of food prices and incomes of the population is temporarily stopped. One of the main reasons for hidden inflation is administrative control over prices. As a result, the market mechanism is deformed. The extent and duration of its change will depend on the policy pursued by the state and the form of regulation. The downside of this inflation is that the unemployment rate will increase during the inflation period because production will not develop.

Modern inflation is classified not only by a decrease in the purchasing power of money as a result of the steady rise in prices for goods and services, but also by disproportion in the production process, negative factors in the circulation of money, finance and credit. The main causes of inflation are the sectors of the economy, savings and consumption, supply and demand, government revenues and expenditures, the balance between the money supply and demand of farms, and the expansion of the central bank's credit. . These factors, in essence, can have a different effect on inflation and its level.

In international practice, economists divide the factors that cause inflation into two main groups: internal and external factors.

1. Internal factors can be divided into paid (monetary) and non-paid factors. Paid factors include the crisis of public finances, the existence of budget deficits. increase in public debt, issuance of money, increase in credit turnover, speed of money circulation, etc. Non-monetary factors include imbalances between national economic sectors, an unstable level of economic development of sectors, the presence of monopolies (oligopolies) in production and services, state monopolies in price formation, credit expansion of the central bank and other factors;

2. External factors, by their nature, reflect the processes taking place in the world that affect the development of any particular state. These factors include raw materials, energy, oil and currency crises, which are industry crises in the world. In addition to these factors, it is possible to include the state-wide monetary policy of any country in relation to other countries, the implementation of the secret, the export of currency, gold. We analyze the patterns of inflation in the following diagram. The analysis of this chart shows that inflation occurs in three main directions. In the first place, money depreciates because of unreasonable increases in prices for goods, works and services. As a result, the purchasing power of the national currency will decline. In the second direction, the exchange rate of the national currency against foreign currencies will decrease. As a result, businesses and the population of the country begin to accumulate freely circulating foreign currencies (US dollars, euros, Swiss francs, etc.). In the third direction, the price of gold, expressed in the national currency, will rise. As a result, the population of the country accumulates gold.

Typically, inflation is divided into two types, demand inflation and supply inflation. Demand inflation is caused by a sharp increase in demand in the economy and its inability to meet real output. In other words, in the conditions of full employment, the productive capacity of the economy cannot meet the growing aggregate demand. Excessive demand puts economic pressure on real commodity prices and leads to demand inflation. Or, to put it simply, "too much money hunts too little." The main reasons for demand inflation are full employment and rising wages. This means that inflation depends on many factors, such as demand, supply, employment, prices, and production rates.

When the economy is in a downturn, if aggregate demand in the country increases, production increases, unemployment decreases, and the price level hardly changes or changes little. The reason the price does not change is that a large amount of idle labor and raw materials can be used at this constant price. Because an unemployed person does not need to increase his salary, it is enough to hire him and there is no need to buy an additional machine.

In addition, prices may rise before the labor force reaches full employment. That is, some industrial enterprises are fully involved in the production of idle resources and reserves earlier, as a result of which they are unable to produce and supply in line with the growth of demand. Demand exceeds supply, and prices rise again.

R – last year's (base) price index.