CAUSES OF INFLATION

CAUSES OF INFLATION

The increases have been generated by different factors, but principally by the late winter of last year and the rainy season began in mid-February to register this year, and could be extended until June.

The increases occurred despite the adjustment of gasoline prices took effect in March.

Between March 2010 and February 2011, ie the last twelve months, the IPC showed a variation of 3.17%. The groups of goods and services that further increase occurred in the first month of the year were education (4.17%), food (0.66%) and health (0.60%). By contrast, those who had less variation in the month of January were fun (-0.14), apparel (-0.10%) and communications (0.04%).

• The demand-pull inflation: Inflation occurs when aggregate demand increases more rapidly than reduction. This increase may have different origins: an increase in household consumption, increased public spending or spending on business investment.

• The cost-inflation: Inflation would by increasing production cost. Maybe motivated by the rising cost of asic natural resources, or the cost borrowing or interest rate.

• The structural-inflation: Is an existence of imperfect markets, which set prices at levels higher than those of free competition, conflict between economic agents, the existence of administered prices to project or benefit certain social sector.