Seromakh D. OA-10-A

Donetsk National University of Economicz and Trade named after M. Tugan-Baranovsky

Socio-economic impact of inflation

At the present stage of development of Ukrainian economy selected for study because the topic is very relevant Inflation is now - one of the most painful and dangerous process, negatively affecting the finance, monetary and economic system as a whole. Inflation not only means reducing the purchasing power of money, but also undermines the possibility of economic regulation, nullifying the efforts to implement structural reforms, recovery of disturbed proportions.

The purpose of this paper is to analyze all the factors of inflation affecting the various processes of social development, as well as to identify all its consequences, both economic and social.

Effect of inflation on the various economic processes:

1) the impact on the fiscal system

In terms of inflation devalued savings, are losing banks and institutions that provide credit. The internationalization of production facilitates the transition of inflation from country to country, complicating international monetary relations.

2) the effect on the redistribution of national income

Inflation has social consequences, it leads to a redistribution of national income. Is a kind of supertax on the population, leading to a backlog growth rates of nominal and real wages by sharply rising prices for goods and services.

Inflation also affects the distribution of income. Along with the rise in prices increased the absolute amounts of income received.

3) the impact of inflation on the accumulation of

With inflation declining savings. Depreciation savings occurs simultaneously on two fronts: reducing the real money-capital and reduce its profitability. In the early stages of inflation, depreciation of deposits is insignificant, but the higher the inflation rate, the fewer goods and services can be purchased for money, are on deposit.

4) the impact of inflation on economic growth

The economy operates destructively high inflation. There are several opinions about how economic growth affects a small rise in prices, but it should be noted that the validity of one or another point of view has not been confirmed empirically. One can recognize that the inflation rate to 5% per year is economic growth. Inflation is above this level affect the economy negatively.

5) the effect of inflation on the balance of payments

If a country with initially equal volumes of imports and exports starts a gradual steady increase in prices, the exports from this country will decline, and imports - to grow, leading to a negative balance of payments.

All types of inflation are complex, varied and very significant economic and social implications for all economic actors. The first of which is the materialization of the accelerated cash flow. Citizens and corporations seek to materialize their rapidly depreciating currency reserves. People are buying antiques, jewelry, appliances, etc.

The next consequence - the hidden confiscation of public funds through taxes. The danger of such a latent state forfeiture funds wrote J. Koine in the 30 years of XX century. As the inflation rate progressive taxation will automatically credit the increasingly diverse social groups and businesses in an increasingly prosperous and profitable. This allows the government to collect an increasing amount of taxes even without the adoption of new tax laws and rates. As a consequence - the deterioration of relations between business and the public to the government.

Another consequence can be called a redistribution of income and wealth. Any domestic loans, in an inflationary environment, when returning after a period of time, at par fully compensated, while the real return is much less.

The fourth consequence - the lag in prices of state enterprises from the market. During inflation, state-owned enterprises are forced to justify every increase in the price, get permission to do so all the parent organizations. This process is long and inefficient, and in terms of monthly sharp, sudden and abrupt rise in inflation even technically difficult to realize. As a result, increases the imbalance of the private and public sectors. This effect is particularly dangerous because the state is losing its economic potential impact on the market.

Fifth consequence, we have identified inverse proportionality of the rate of inflation and unemployment. Rising inflation is almost always combined with a high, albeit part-time and large volume of national production. Conversely, a decline in inflation coincided with a recession and rising unemployment.

Another consequence of inflation - the instability of economic information.

Summarizing all the above, we can conclude that inflation - is a complex economic process, in which there are manifestations of moderate share of the benefits and advantages in terms of its critical as there is a considerable threat to the economic policy of the state and its citizens, in particular. The normalization of monetary inflation and counter require tuned, flexible solutions that persistently and purposefully carried into action. To overcome inflation can only be rebuilding the economic mechanism and turning off the market regulator, which is only possible with a stable political situation.