Inflation is a normal component of any economic system. It either grows or slows down, and many factors influence this. Each state seeks to restrain inflation, but this is not always easy. Sometimes inflation becomes impossible to control, then there is a risk of an economic crisis.
Emission
One of the most significant factors affecting inflation is the issue of cash that has no real basis, that is, is not backed up by the country's goods or gold reserves. Sometimes this happens if the budget does not receive the necessary amount of money, but the state needs to spend it, because it is necessary to maintain the functioning of the entire machine of power, conduct social programs, and so on.
Production reduction
If the country produces less goods than the population needs, but its well-being is growing at the same time, there is an oversupply of available funds and a lack of ways to spend them. Then inflation begins to grow rapidly. In such conditions, enterprises producing goods become harder to survive, which further spurs inflation.
Human factor
The human factor is the most difficult moment that is considered uncontrollable. It may turn out that as a result of some processes, a rumor spreads among the people that forces people to urgently spend or invest their savings, to do something else. The economies of many countries are rather fragile, and if all residents simultaneously begin to carry out the same financial transactions, it may not sustain. For example, if the population begins to buy all goods of one type, then this will inevitably lead to an increase in prices for them, and after that prices for other goods can also rise. In the same way, the exchange rate of foreign currency against the local one can increase.
Antitrust Policy
This factor, unlike the previous ones, reduces inflation. If a certain sector in the economy or the price of a particular group of goods is managed by one company, it is easy for it to raise the price by regulating demand. But if there are many such companies, they will not act together, so the cost of goods will remain natural, which will not allow inflation to grow too quickly.
