In economics, inflation is a process of rising prices in general and persistent (continuous) associated with the market mechanism that can be caused by various factors, among others, private consumption increased, excess liquidity in the market that triggered the consumption or even speculation , up to including the launch due to lack of distribution of goods.  In other words, inflation is also a process of declining currency value continuously. Inflation is the process of an event, rather than the high-low price levels. That is, the higher the price level that is considered not necessarily indicate inflation. Inflation is an indicator to see the changes, and is considered to occur if the price increase takes place continuously and mutually influence affect. Inflation term is also used to mean an increase in money supply which is sometimes seen as the cause of rising prices. There are many ways to measure the rate of inflation, the two most commonly used is the CPI and the GDP Deflator.
Inflation can be classified into four categories, namely inflation is mild, moderate, severe, and hyperinflation. Mild inflation occurs when prices were below the 10% a year; inflation was between 10% -30% a year; weight of between 30% -100% a year; and hyperinflation or uncontrollable inflation occurs when prices are above 100% a year.
Causes of Inflation
Inflation can be caused by two things, namely the pull of demand (excess liquidity / money / medium of exchange) and the second is the pressure (pressure) production and / or distribution (lack of production (product or service) and / or also include the lack of distribution). [ citation needed] For the first cause is more affected than the state's role in monetary policy (Central Bank), while for the second reason is more affected than the state's role in policy executor in this case held by the Government (Government) as of fiscal (tax / fee / incentive / disincentives), infrastructure development policies, regulations, etc..
Demand pull inflation (Ingg: demand pull inflation) occurs due to excessive total demand which is usually triggered by a flood of liquidity in the market resulting in high demand and lead to changes in price levels. Increased volume of exchange or liquidity associated with the demand for goods and services resulting in increased demand for factors of production. Increased demand for factors of production that then leads to the input price increases. Thus, inflation occurs because of an increase in total demand as the economy is concerned in a situation of full employment dimanana stimulation usually caused by an excessive volume of market liquidity. The flood of liquidity in the market are also caused by many factors other than the main course, the ability of central banks in regulating the circulation of money, central bank interest rate policy, to the speculation that occurred in the financial industry.
Cost push inflation (Ingg: cost push inflation) are the result of the scarcity of production and / or also include the scarcity of distribution, although the demand in general no changes were significantly increased. The existence of non-launch flow or reduced production of this distribution are available from the average normal demand could lead to price increases in accordance with the enactment of the law of demand-supply, or because the formation of the new position of economic value to the product due to the pattern or distribution of a new scale. Reduced its own production can result from many things such as a technical problem at the source of production (factories, plantations, etc.), natural disasters, weather, or shortages of raw materials to produce they will be, speculation (hoarding), etc., leading to production shortages The relevant market. So did the same thing can happen to the distribution, which in this case the infrastructure factor plays a crucial role.
Increased production costs can be caused two ways, namely:
price increases, such as raw materials and increase in wages / salaries, eg civil servants salary increases will result in private efforts to raise the price of the goods.