Skip to main content
Select Source:

Inflation

INFLATION

INFLATION. Inflation is a long-term, sustained rise in the general level of prices, as measured by a consumer price index. For early modern European history, the best known of these are the "basket of consumables" indexes devised by Earl Hamilton for Spain (for the period 15011650), by Henry Phelps Brown and Sheila Hopkins for southern England (12641954), and by Herman van der Wee for the Antwerp-Lier-Brussels region of Brabant (14011700). In European economic history, undoubtedly one of the longest and certainly the best-known era of inflation was the so-called price revolution of circa 15151650 (See Table 1). If we take the decade 15011510 as the base, for which the average price index in all three regions equals 100, and then calculate five-year means of these price indexes, we would find, by the final quinquennium 16461650, that the Spanish index had risen to 457.09; the English index to 697.54; and the Brabantine index to 845.07 (i.e., an 8.45-fold increase). Thus, one may observe that, during this 135-year period, inflation was a Europewide phenomenon, but that its intensity and impact varied by region, according to local circumstances. Thereafter, prices fell in most of western Europe, as, by 16561660, to an index of 614.45 in Brabant and to 569.56 in England.

REAL (DEMOGRAPHIC) AND MONETARY FACTORS IN INFLATION: THE EQUATION OF EXCHANGE

In the literature of early modern economic history, the predominant though quite misleading explanation for this inflation has been population growth. To be sure, population growth, acting upon relatively fixed (inelastic) land and other natural resources, resulting in diminishing returns and rising marginal costs, may well explain the rise in the relative prices of some specific commodities, such as grain and timber (whose English prices did rise the most over this 130-year period). But demographic factors alone cannot explain a rise in the price level; for inflation is fundamentally though not uniquely monetary in origin and character. Indeed, since England's population in the early 1520s was only

Composite Price Indexes for Brabant, Southern England, and Spain (Castile)
IN QUINQUENNIAL MEANS: 150105 TO 164650
INDEX: MEAN OF 150110 = 100
Years Brabant 150110=100 England 150110=100 Spain 150110=100 Silver-Based Spain 150110=100 Vellon from 1597*
150105 104.43 101.43 92.43 92.43
150610 95.57 98.57 107.57 107.57
151115 114.80 103.08 98.98 98.98
151620 125.09 114.40 104.28 104.28
152125 149.79 138.72 122.14 122.14
152630 148.61 149.45 131.57 131.57
153135 144.85 147.83 132.44 132.44
153640 154.54 144.69 138.73 138.73
154145 173.44 167.69 147.90 147.90
154650 166.01 218.12 165.89 165.89
155155 216.87 261.63 176.02 176.02
155660 250.34 300.00 194.01 194.01
156165 261.34 274.80 223.43 223.43
156670 264.97 277.63 227.73 227.73
157175 352.49 281.24 246.77 246.77
157680 400.18 319.61 247.82 247.82
158185 513.98 320.58 269.07 269.07
158690 665.77 367.74 274.97 274.97
159195 573.01 395.14 284.42 284.42
159600 626.80 513.42 320.97 320.98
160105 509.74 438.12 349.92 352.43
160610 512.71 472.06 330.11 335.31
161115 529.56 506.11 316.81 322.68
161620 521.93 494.28 328.56 335.64
162125 679.09 503.14 317.85 344.72
162630 765.57 498.72 328.04 410.81
163135 756.32 577.86 329.91 395.13
163640 805.55 584.26 323.47 409.67
164145 821.78 532.37 313.50 432.48
164650 845.07 697.54 343.36 457.09
* Vellon was a largely copper-based coinage, with little but diminishing amounts of silver. The high-denomination and basically pure silver and gold coins were not debased. From 1597 this index is based on actual Spanish prices, while the silver-based index is based on Hamilton's estimates of prices based on the silver contents of the entire coinage (i.e., as if the vellon coinage had been excluded).

about 2.25 million, evidently less than half the late-medieval peak of about 5.0 million in 1300, it is inconceivable that any renewed population growth in the following three decades could have produced the ensuing inflation, by which the mean price index more than doubled, to a mean of 218.12, in the quinquennium 15461550.

The relationship between monetary and socalled "real factors" (population, investment, technology, trade) can be best expressed by the Equation of Exchange, M.V = P.y, which is a modified version of the famous Fisher Identity. On the righthand side, P stands for the price level, as measured by one of the aforementioned "basket of consumables" indexes; and y represents the real (deflated) value of net national income (NNI) = net national product (NNP = Gross National Product minus depreciation), replacing the unmeasurable T (total transactions) in the original Fisher Identity. On the left-hand side, M is the total stock of available money, which, in this era meant gold and silver coins, supplemented by some credit instruments; and V represents the income velocity of money: the rate at which a unit of money (e.g., the silver penny) circulates in producing aggregate national income y.

A much earlier generation of economists had quite fallaciously believed that both V and T (or y) were fixed, at least in the short run, so that changes in the quantity of money M necessarily produced a proportional change in the price level P. But since all four of these variables are in fact always variable, an increase in M need not produce any inflation, because it could be offset by a fall in V and a corresponding rise in y, that is, by stimulating real economic growth. Indeed, Keynesian economists believe that, since a high level of V reflects society's efforts to economize on scarce stocks of money, an increase in M should be offset by some fall in V, a theorem that can be historically demonstrated for much of western Europe from the thirteenth to nineteenth centuries, with one significant exception: the price revolution era, when V may have doubled.

For this era, we may conclude that the product of M.V ultimately expanded to a greater extent than did the real growth of national income y (or NNP), so that inflation (rising P) ensued. Population growth (more than doubling, in England, to 5.60 million by 1651) may have played a dual role in this inflation: by inducing diminishing returns and rising marginal costs in the agricultural and extractive industries, thus restricting the rate of economic growth; and by inducing a rise in V (income velocity), through changes in demographic structures (higher dependency ratios) and market structures, with increased urbanization and commercialization.

THE CAUSES OF THE EUROPEAN PRICE REVOLUTION, 15151650

But if the crude quantity theory of money is historically fallacious, nevertheless changes in money stocks and money instruments do remain paramount in explaining the price revolution. Monetary expansion in fact had begun far earlier, with Portuguese imports of West African gold from the 1460s, but most especially with the central European silver-copper mining boom, also from the 1460s. It may have increased European silver stocks fivefold by the 1540s (to possibly 90,000 kg per year); and a considerable stock of underutilized resources may explain why inflation did not ensue until after 1510. Only from the 1540s did an influx of Spanish American silver become truly important, with imports rising from an annual mean of 16,816 kg in 15411545 to a peak of 273,705 kg in 15911595 (223,027 kg in 16211625). But of equal monetary importance was a veritable financial revolution in negotiable credit, established in the Habsburg Netherlands and England from the 1520s: with effective institutions for legally enforceable transactions in negotiable bills of exchange, bills obligatory (promissory notes), and government annuities (rentes). Indeed in Habsburg Spain the issue of negotiable annuities (juros) (many of which were traded on the Antwerp Bourse) rose from 3.6 million ducats in 1516 to 80.4 million ducats in 1598 (death of Philip II). The impact of such changes in both private and public credit increased both the effective money supply and certainly its velocity of circulation.

One may therefore wonder why the degree of inflation was so much less in Spain than in the Netherlands (Brabant) and England. The principal reason lies in another monetary factor. For coinage debasements were absent in Spain before 1597 but had become quite drastic in sixteenth-century England ("Great Debasement" of 15421552) and in the southern Netherlands (less drastic, though more prolonged). Furthermore, credit undoubtedly played a smaller role in the relatively undeveloped Spanish economy.

THE CONSEQUENCES OF THE EUROPEAN PRICE REVOLUTION

Only a summary of the consequences of inflation may be suggested here. In general, inflation redistributes income from wage earners and those living on fixed incomes, especially landowners with many hereditary tenures, or leaseholds on long-term contracts, to merchants and industrialists, in particular. Many in the latter group certainly benefited from a general lag of wages behind prices, even if industrial prices rose much less than did grain prices; and, given the vital importance of capital in the economy, most merchants and industrialists benefited from a fall in real interest costs, all the more so since nominal as well as real interest rates fell over this entire period throughout western Europe. Many peasants or small landholders also gained, insofar as their rents remained fixed, while the prices of the products that they sold in the market continued to rise. On the other hand, some undoubtedly did suffer the consequences of population growth, at least in areas of partible inheritance, which thus meant a significant subdivision of holdings. A balance sheet of winners and losers from inflation would be most difficult to construct for the price revolution era.

See also Capitalism ; Economic Crises ; Landholding ; Money and Coinage ; Peasantry .

BIBLIOGRAPHY

Fisher, Douglas. "The Price Revolution: A Monetary Interpretation." Journal of Economic History 49 (December 1989): 883902.

Goldstone, Jack A. "Urbanization and Inflation: Lessons from the English Price Revolution of the Sixteenth and Seventeenth Centuries." American Journal of Sociology 89 (1984): 11221160.

Lindert, Peter. "English Population, Wages, and Prices: 15411913." Journal of Interdisciplinary History 15, no. 4 (spring 1985): 609634.

Mayhew, Nicholas. "Population, Money Supply, and the Velocity of Circulation in England, 13001700." Economic History Review, 2nd ser., 482 (May 1995): 238257.

Munro, John. "The Monetary Origins of the 'Price Revolution': South German Silver Mining, Merchant-Banking, and Venetian Commerce, 14701540." In Global Connections and Monetary History, 14701800. Edited by Dennis O. Flynn, Arturo Giráldez, and Richard von Glahn. Aldershot, U.K., 2002.

Outhwaite, R. B. Inflation in Tudor and Early Stuart England. Studies in Economic and Social History series, 2nd ed. London, 1982.

Ramsey, Peter H., ed. The Price Revolution in Sixteenth Century England. London, 1971.

John H. Munro

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Inflation." Europe, 1450 to 1789: Encyclopedia of the Early Modern World. . Encyclopedia.com. 27 Jul. 2017 <http://www.encyclopedia.com>.

"Inflation." Europe, 1450 to 1789: Encyclopedia of the Early Modern World. . Encyclopedia.com. (July 27, 2017). http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/inflation

"Inflation." Europe, 1450 to 1789: Encyclopedia of the Early Modern World. . Retrieved July 27, 2017 from Encyclopedia.com: http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/inflation

Inflation

INFLATION

INFLATION. The definition of "inflation" cannot be separated from that of the "price level." Economists measure the price level by computing a weighted average of consumer prices or so-called "producer" prices. The value of the average is arbitrarily set equal to one (or one hundred) in a base year, and the index in any other year is expressed relative to the base year. The value of the consumer price index in 1999 was 167, relative to a value of 100 in 1982 (the base year). That is, prices in 1999 were 67 percent higher on average than in 1982.

Inflation occurs when the price level rises from one period to the next. The rate of inflation expresses the increase in percentage terms. Thus, a 3 percent annual inflation rate means that, on average, prices rose 3 percent over the previous year. Theoretically, the rate of inflation could be by the hour or the minute. For an economy suffering from "hyperinflation"—Germany in the 1920s is an example—this might be an appropriate thing to do (assuming the data could be collected and processed quickly enough). For the contemporary United States, which has never experienced hyperinflation, the rate of inflation is reported on a monthly basis.

Deflation is the opposite of inflation: a fall in the price level. Prior to World War II deflation was quite common in the United States, but since World War II, inflation has been the norm. Prewar deflation took two forms. First, the price level might decline very sharply during an economic downturn. This happened, for example, in the early 1840s, when the country was hit by a severe depression, as well as during the Great Depression of the 1930s. Second, deflation might occur over long periods of time, including periods of economic expansion. For example, the price level in the United States in 1860 was lower than in 1820, yet during these four decades the economy grew rapidly and experienced much structural change.

Measuring Inflation

The measurement of the price level is a difficult task and, therefore, so is the measurement of the inflation rate. For example, many economists believe that the consumer price index has overstated the rate of inflation in recent decades because improvements in the quality of goods and services are not adequately reflected in the index. An index that held quality constant, according to this view, would show a smaller rate of price increase from year to year, and thus a smaller average rate of inflation.

It is important to recognize that a positive rate of inflation, as measured by a price index, does not mean that all prices have increased by the same proportion. Some prices may rise relative to others. Some might even fall in absolute terms, and yet, on average, inflation is still positive.

The distinction between absolute and relative price change is important in understanding the theory behind the effects of inflation on economic activity. In the simplest "static" (one-period) economic model of consumer behavior, a fully "anticipated" (understood and expected by consumers and producers) doubling of all prices—the prices of the various consumer goods and the prices of the various productive "inputs" (factors of production, like labor)—does not change the structure of relative prices and therefore should have no effect on the quantities of goods demanded. Similarly, the conventional model of producer behavior predicts that a doubling of all prices would not affect output price relative to the cost of production and therefore would not affect the quantity of goods supplied. The nominal value of GNP (gross national product) would double, but the real value would remain constant. In such a model, money is said to be "neutral," and consumers and producers are free of "money illusion." In more complex, dynamic models, it is possible that a sustained, higher rate of inflation would alter consumers' desired holds of money versus other assets (for example, real estate) and this might change real economic activity.

When inflation is unexpected, however, it is entirely possible—indeed, almost inevitable—that real economic activity will be affected. Throughout American history there is evidence that money wages are "sticky" relative to prices; that is, changes in money wages lag behind (unexpected) changes in the price level. During the early years of the Great Depression of the 1930s, nominal hourly wages fell but not nearly as much as prices. With the real price of labor "too high," unemployment was the inevitable result. When inflation is unexpected, consumers or producers may react as if relative prices are changing, rather than the absolute price level. This can occur especially if the economy experiences a price "shock" in a key sector—for example, an unexpected rise in the price of oil—that sets off a chain of price increases of related products, and a downturn in economic activity.

Causes of Inflation

All of which begs the underlying question: What ultimately causes inflation (or deflation)? Although this is still a matter of dispute among economists in the details, most believe that inflation typically occurs when the supply of money increases more rapidly than the demand for money; or equivalent, when the supply of money per unit of output is increasing. This might occur within a single country; in a global economy, it can also spill over from one country to another. The supply of money per unit of output can increase either because the "velocity" at which it circulates in the economy has increased or, holding velocity constant, because the stock of money per unit of output has increased.

This leads to another question: What factors determine the rate of growth of the money supply relative to money demand? The demand for money depends on the overall scale of economic activity, along with interest rates, which measure the opportunity cost of holding money balances. The supply of money depends on the so-called "monetary regime"—the institutional framework by which money is created.

During the nineteenth century and part of the twentieth, the United States adhered to the gold standard and, at times, a bimetallic (silver) standard. Under the gold standard, the money supply was "backed" (guaranteed) by holdings of gold, so the supply of money could grow only as rapidly as the government's holdings of specie. If these holdings increased more slowly than the demand for money, the price level would fall. Conversely, if holdings of specie increased more rapidly than the demand for money, the price level could rise. Generally, the latter would occur with the discovery of new deposits of gold (or silver) in the United States—or elsewhere, because gold flowed across international borders—as occurred in California in the late 1840s, or in South Africa in the late 1890s.

During periods of war the money supply was augmented with paper money. For example, during the Civil War, both the Union and Confederate governments issued greenbacks as legal tender. The price level rose sharply during the war years. Real wages fell, producing an inflation "tax" that both sides used to help pay for the war effort.

In the contemporary United States, the main institutional determinant of the money supply is the Federal Reserve. The Fed can affect the growth of the money supply in several ways. First, it can engage in open market operations, the buying and selling of government securities. When the Fed buys securities, it injects money into the system; conversely, when it sells securities, it pulls money out. Second, the Fed can alter certain features of the banking system that affect the ability of banks to "create" money. Banks take in deposits, from which they make loans. The supply of loanable funds, however, is larger than the stock of deposits because banks are required only to keep a fraction of deposits as reserves. The Fed can alter the reserve ratio, or it can alter the rate of interest that it charges itself to lend money to banks.

Most economists believe that the Federal Reserve, when deciding upon monetary policy, faces a short-run trade-off between inflation and unemployment. In the long run, unemployment tends toward a "natural" rate that reflects basic frictions in the labor market and that is independent of the rate of inflation. If the goal in the short run is to reduce unemployment, the Fed may need to tolerate a moderate inflation rate. Conversely, if the goal is to lower the inflation rate, this may require a slowdown in economic activity and a higher unemployment rate. Since World War II, the Federal Reserve has sought to keep inflation at a low to moderate level. This is because a high or accelerating rate of inflation is typically followed by a recession. Some economists believe that, rather than trying to "fine-tune" the economy, the Fed should "grow" the money supply at a steady, predictable pace.

It is sometimes argued that inflation is good for debtors and bad for creditors, and bad for persons on fixed incomes. A debtor, so goes the argument, benefits from inflation because loans are taken out in today's dollars, but repaid in the future when, because of inflation, a dollar will be worth less than today. However, to the extent that inflation is correctly anticipated—or "rationally expected"—the rate of interest charged for the loan—the "nominal" rate—will be the "real" rate of interest plus the expected rate of inflation. More generally, any fixed income contract expressed in nominal terms can be negotiated in advance to take proper account of expected inflation. However, if inflation or deflation is unanticipated, it can have severe distributional effects. During the Great Depression millions of Americans lost their homes because their incomes fell drastically relative to their mortgage payments.

Inflation in American History

In the eighteenth and nineteenth centuries and, indeed, in the first half of the twentieth century, inflation was uncommon. Major bouts of inflation were associated with wars, minor bouts with short-term economic expansions ("booms").The booms usually ended in financial "panics," with prices falling sharply. During the nineteenth century this pattern played itself out several times, against a backdrop of long-term deflation.

The first wartime experience with inflation in U.S. history occurred during the American Revolution. Prior to the Revolution inflation did occur periodically when colonial governments issued bills of credit and permitted them to circulate as money, but these were banned by Parliament between 1751 and 1764.When war broke out, bills of credit were again circulated in large numbers. Be-cause the increase in the money supply far exceeded the growth of output during this period, the price level rose sharply.

Wartime inflations in American history have typically been followed by severe deflations, and the Revolution was no exception. After dropping by two-thirds between 1781 and 1789, prices rebounded and eventually stabilized. The next big inflation occurred with the War of 1812.Briefer and less intense than its revolutionary counterpart, prices fell sharply after peaking in 1814.The price level continued to trend downward in the 1820s but reversed course in the mid-1830s during a brief boom. A financial panic ensued, and the country plunged into a severe downturn accompanied by an equally severe deflation. The economy began to recover after 1843, and the price level remained stable until the mid-1850s, when, fueled by the recent gold discoveries in California, inflation returned. Again, however, a financial panic occurred and prices fell. In 1860, the eve of the Civil War, the price level in the United States was 28 percent below the level in 1800; that is, the preceding six decades were characterized by long-term deflation.

To help finance the war effort, Congress and the Confederacy both issued paper money. Inflation followed, peaking in 1864.The price level dropped sharply after the war and, except for a brief period in the early 1880s, continued on a downward course for the remainder of the nineteenth century.

The discovery of gold in South Africa in the mid-1890s signaled another expansion of the money supply. Prices rose moderately after 1896, stabilizing in the years just prior to World War I. Inflation returned with a vengeance during the war, with prices rising by nearly 228 percent between 1914 and 1920.Once again, a sharp postwar recession was accompanied by deflation, but recovery ensured the price level remained stable for the remainder of the 1920s.

Following the stock market crash in October 1929, a deep and prolonged deflation accompanied the dramatic bust that became the Great Depression. Prices fell by one-third between 1929 and 1932.Nominal hourly wages did not fall as much as prices, however, and unemployment rose sharply, to nearly a quarter of the labor force. Convinced that higher wages and higher prices were the key to renewed prosperity, the "New Deal" administration of President Franklin D. Roosevelt adopted a multipronged attack: raising prices directly via the National Recovery Act, reforming the banking system, and expanding the money supply. The price level did turn around beginning in 1933 but fell once again in 1938 during a brief recession.

It took the Nazis and the Japanese invasion of Pearl Harbor to reinvigorate the inflationary process in the United States. Unemployment dropped sharply, putting considerable upward pressure on wages and prices. To some extent this pressure was abated through the use of wage and price controls that lasted from 1942 to 1946, although it is widely believed that official price indexes for the period understate the true inflation because many transactions took place at high "black market" prices, and these are not incorporated into the official indexes.

In the years since World War II the United States has experienced almost continuous inflation, the only exception being very slight deflation in the early 1950s. The inflation rate was nonetheless quite moderate until the expansion of the Vietnam War in the late 1960s. A reluctant President Richard Nixon mandated a series of price controls from 1971 to 1974, but these did little to stem the tide of rising prices, particularly after an international oil embargo in 1973–1974 caused energy prices to skyrocket. Overall in the 1970s the consumer price index rose at an average annual rate of nearly 7.5 percent, compared with 2.7 percent per year in the 1960s. A sharp recession in the early 1980s coupled with activist monetary policy cut the inflation rate to an average of 4.6 percent between 1980 and 1990.Inflation fell further in the 1990s, to an average of 2.7 percent (1990–1999).

As noted, the federal government reports the inflation rate on a monthly basis. Recent data may be found in the U.S. Census Bureau's publication, Statistical Abstract of the United States, and on-line at the Bureau's Web site (www.census.gov) or the Web site of the Bureau of Labor Statistics (www.bls.gov). For long-term historical data on the price level, readers should consult the various editions of Historical Statistics of the United States or the volume by McCusker (2001).

BIBLIOGRAPHY

Friedman, Milton, and Anna Jacobson Schwartz. A Monetary History of the United States. Princeton, N.J.: Princeton University Press, 1963.

Hanes, Chris. "Prices and Price Indices." In Historical Statistics of the United States, Millennial Edition. Edited by Susan B. Carter, Scott S. Gartner, Michael Haines, Alan L. Olmstead, Richard Sutch, and Gavin Wright. New York: Cambridge University Press, 2002.

McCusker, John J. How Much Is that in Real Money? A Historical Price Index for Use as a Deflator of Money Values in the Economy of the United States. Worcester, Mass.: American Antiquarian Society, 2001.

Parkin, Michael. "Inflation." In The New Palgrave: A Dictionary of Economics. Edited by John Eatwell, Murray Milgate, and Peter Newman. Vol 2.New York: Stockton Press, 1987.

Rolnick, Arthur J., and Warren E. Weber. "Money, Inflation, and Output Under Fiat and Commodity Standards." Journal of Political Economy 105 (December 1997): 1308–1321.

U.S. Department of Commerce. Historical Statistics of the United States from Colonial Times to 1970. Washington, D.C.: Government Printing Office, 1975.

———. Statistical Abstract of the United States: The National Data Book. 120th ed. Washington, D.C.: Government Printing Office, 2000.

RobertMargo

See alsoBusiness Cycles ; Consumer Purchasing Power ; Cost of Living ; Economic Indicators ; Price and Wage Controls ; Prices ; Stagflation .

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Inflation." Dictionary of American History. . Encyclopedia.com. 27 Jul. 2017 <http://www.encyclopedia.com>.

"Inflation." Dictionary of American History. . Encyclopedia.com. (July 27, 2017). http://www.encyclopedia.com/history/dictionaries-thesauruses-pictures-and-press-releases/inflation

"Inflation." Dictionary of American History. . Retrieved July 27, 2017 from Encyclopedia.com: http://www.encyclopedia.com/history/dictionaries-thesauruses-pictures-and-press-releases/inflation

Inflation

Inflation

THE ORTHODOX APPROACH AND INFLATION

THE HETERODOX APPROACH AND INFLATION

BIBLIOGRAPHY

Like many topics in economics, the concept of inflationdefined as an overall increase in the general price level of goods and services measured against a standard level of purchasing poweris subject to considerable disagreements among economists, highlighting the important differences between orthodox and heterodox economics. There are three important areas of disagreements. First, there is no consensus on the possible causes and consequences of inflation, even in a small, open economy. Second, economists disagree on the advantages of fighting inflation; in other words, should inflation-reduction be the primary goal of macroeconomic policy? Finally, economists disagree on the policies to be used to combat inflation. Indeed, in recent years there has been widespread agreement over interest ratetightening as a way of fighting inflation, but such policies are misplaced, because they produce lower economic activity and higher unemployment.

Inflation is measured by keeping track of the changes in the prices of a number of items within a specific basket of goods and services over a given period of time, ignoring any improvement in quality. There are a number of ways of calculating inflation. For instance, the consumer price index (CPI) measures the changes in the prices of goods and services generally purchased by consumers. It is by far the most commonly used measurement. Other measurements include the gross domestic product (GDP) deflator, which measures inflation over the entire domestic economy.

THE ORTHODOX APPROACH AND INFLATION

For orthodox economists, inflation carries important costs because there are advantages to lower inflation. Among the costs, orthodox economists claim that inflation erodes the value of money, and economic agents are frustrated in making their consumption and saving decisions; it encourages speculative investment to the detriment of productive investment; and it represents hardship for those on limited incomes or on incomes that are not indexed.

Among the benefits of low inflation, orthodox economists point to the ability of economic agents to make better, more informed, long-term decisions given the relative stability of purchasing power. For instance, because inflation is considered to lower the value of money, low inflation restores confidence in money: By reducing future variations in the price level, households can better plan their consumption and saving plans and regain confidence in the future value of money. Economists also claim that low inflation lowers nominal and real interest rates, and therefore produces overall stability of the economic system, as low inflation is self-reinforcing.

In orthodox economics, the principal cause of inflation is excess demand in the goods and/or labor markets, a direct result of scarcity in both markets. Whenever aggregate demand is greater than aggregate supply at any given price, the overall level of prices of goods and services will tend to increase in order to eliminate the excess demand: Inflation is demand-led. This is the necessary consequence of interpreting macroeconomics through the use of aggregate demand (AD; the total demand for goods and services in a national economy) and aggregate supply (AS; the total supply of goods and services in a national economy) analysis, interacting in price-output space. If there is a positive relationship between prices and output, it is because the AS curve is nonhorizontal. In this sense, both output and the price level are the result of AD-AS interaction. This analysis leads to an understanding of the role of prices in orthodox theory as a mechanism that guarantees market clearing.

In fact, irrespective of the specific neoclassical or orthodox approach, excess demand is always a central focus of inflation. Indeed, for monetarists, the growth of the money supply over and above the growth of output is seen as the principal cause of inflation. In their words, inflation is always and everywhere a monetary phenomenon (Friedman 1963). For monetarists, increases in the money supply always precede increases in prices. This results from the belief that the money supply is an exogenously determined quantity, independent of the needs of the economic system. The money supply is simply imposed on the system by the central bank, which can choose at will the growth rate of the money supply. Hence, whenever the central bank is pursuing expansionary policies, it allow the growth rate of the money supply to exceed that of output, resulting in too much money chasing too few goods, the inevitable result of which is higher price levels. This view is based on the well-known quantity theory of money.

Keynesians, however, although they do not deny the role played by the exogenous money supply, place the emphasis primarily on output, given the relationship between output (unemployment) and inflation as embedded in the Phillips curve, according to which there is a trade-off between unemployment and inflation: Lower unemployment implies higher inflation. In other words, fighting unemployment comes at the cost of higher inflation. As unemployment decreases, wages tend to increase, raising prices in the process.

An obvious question is what then may cause excess demand? The answer lies in expansionary monetary and fiscal policiesin other words, the central bank and the state. In addition to an expansionary monetary policy, inflation arises because governments pursue an expansionary fiscal policy. Inflation arises either because the deficit is financed by printing money, or because an increase in fiscal policy will increase output, spending, and therefore demand for goods and labor.

Given the above discussion, the policy solution to contain inflation is to reduce the pressure on prices by reducing overall demand in the economy. This means limiting the growth of the money supply and reducing fiscal expenditures: Policymakers need to adopt responsible, sound policies. For Keynesians, this implies higher unemployment and lower wages.

THE HETERODOX APPROACH AND INFLATION

For heterodox economists and post-Keynesians in particular, excess demand is not the principal cause of inflation, largely because the economy almost always produces at less than full capacity: There is almost never an excess demand for goods, and similarly, there is but rarely scarcity in the labor market. Post-Keynesians and heterodox economists nonetheless acknowledge that demand may have some influence on prices, but it is considered to be small and indirect. This statement has direct implications for and stands in stark contrast with neoclassical theory. For instance, one of the main consequences is that fiscal spending or excess growth of the money supply cannot be a causal or direct influence on prices and inflation. Indeed, for heterodox economists, money is never a cause of inflation. This is because the money supply is endogenously determined: Excess money cannot exist (Lavoie 1992; Rochon 1999). In other words, the money supply is not determined by the central bank, but rather by the needs of production.

In contrast to orthodox theory, therefore, the principal cause of changes in the price level is increases in the costs of production. In this sense, heterodox economists adopt a cost-push approach to inflation. That said, orthodox economists do not deny the importance of costs in determining changes in the price level, but there are important differences between the orthodox and heterodox approaches. For the former, changes in cost are usually the result of supply shocks, which occur only occasionally, such as a sudden increase in the price of oil or some unexpected and unforeseen event abroad. For heterodox economists, however, changes in the costs of production are the primary and dominant cause of inflation, and are part of the normal operations of contemporary economic systems.

For heterodox economists, however, inflation is not merely cost-driven, but it is also the result of conflicting claims over the appropriate division of income. Markets are characterized by dynamic interactions between macro-groups, such as workers, firms, and rentiers, each vying to get a larger share of income: Workers want higher wages, firms want higher profits, and rentiers want higher rents. In this sense, inflation is the result of a struggle over the distribution of income. It can arise largely from either a wage-wage spiral or a wage-price spiral, or from the attempt by firms to impose a given rate of return. In this sense, two important features of the heterodox explanation of inflation are collective bargaining and administered prices.

For instance, in formalized conflicting claim models, such as that described by Louis-Philippe Rochon and Mark Setterfield (2007), workers have a target wage share that they consider fair, equitable, or just. And although workers in general want to increase their overall nominal (or real) wages, they also want to maintain their social standing and their wages relative to other workers. If a specific group of workers negotiates higher wages, other groups may also demand higher wages in order to maintain their relative standing in the social order, fuelling the inflationary spiral. In turn, this wage-wage spiral implies higher costs of production for firms, which may try to pass on these costs to consumers through higher prices, which in turn will reduce real wages and lead to possible demand for higher wages in the future.

Moreover, firms may want to increase their standard rate of return to historical levels (Lavoie 1992). Firms may experience lower than normal returns and may want to increase their mark-up in order to bring their rate of return in line with more traditional levels, raising prices in the process. This in turn will lead to lower real wages, and workers may demand higher nominal wages to compensate.

Firms may be able to raise prices because, unlike in neoclassical theory, prices are administered: Firms set prices according to a mark-up over costs of production, not by competitive forces in the economy. In other words, firms will impose a rate of return over and above the normal costs of production, primarily wages and interest costs on debt, because they target a certain margin of profit.

In the end, whether firms or workers succeed in imposing their wills depends on the relative power of workers vis-à-vis firms in the wage bargain, and the relative power of firms in commodity markets. In turn, these powers vary according to the economic cycle or with the market structure. For instance, during periods of growth when unemployment is low, workers have greater power and may be able to demand higher wages. As for firms, brand loyalty, advertising, and the complexity of products give them greater power over prices (Lavoie 1992).

Finally, conflict also arises between firms and rentiers, who also want to increase their share of income. When the central bank increases interest rates, satisfying rentiers, firms may increase their mark-up and prices, and thus lower real wages. This also highlights an indirect conflict between workers and rentiers. For John Smithin (1994), rentiers are at the heart of the conflict. It is in this sense that heterodox economists see the rate of interest as a distributive variable.

The same analysis can be used to analyze deflation, that is a generalized decrease in the overall price level. In a conflicting claims model, one can assume that during periods of high unemployment, when workers are more desperate for work, they would be willing to work at wages lower (lower target wage) than what firms would be willing to offer in an effort to squeeze themselves into the labor market. With these downward pressures on wages, it remains possible for firms to lower prices, although deflation remains a rare phenomenon in contemporary developed economies since World War II, where the general trend on prices has been upward.

Similarly, the cost-plus approach and conflicting-claims model can be used to explain periods of hyperinflation (Camara and Vernengo 2001). For instance, in the case of inter-war Germany, the most probable cause of hyperinflation was the extreme costs of war reparations imposed by the Treaty of Versailles, a collapse of German exports, a depreciation of the currency, and higher prices. One may further assume that workers may resist the resulting important decline in real wages, along the same lines as described earlier. In the end, conflicting claims and distribution are key components of the explanation of both inflation and hyperinflation.

Heterodox economists also stand in contrast with orthodox economists in proposing policy remedies for fighting inflation. Three questions arise. First, should inflation always be the primary target of economic policy? Second, should the central bank be solely responsible for pursuing anti-inflationary policies, as has become the case in recent years? Finally, how can inflation be tamed?

Heterodox economists believe that too much emphasis is placed on fighting inflation, to the detriment of fighting unemployment and growth, which are the central focus of heterodox policy. As excess demand is not a direct contributor to inflation, there is no reason to believe that economic growth necessarily accompanies inflation. Moreover, because money is not seen as the principal cause of inflation, and also because there is only an indirect link between interest rates and inflation, heterodox economists do not see the central bank as the primary institution to fight inflation. In fact, central bank policy exacerbates the inflationary process.

Nevertheless, to fight inflation, heterodox economists propose a two-prong policy. First, we need de-emphasize the role of the central bank by setting the real interest rate at a fair level (equal to the growth rate of labor productivity), thereby limiting the influence of the rentier class. Second, we should adopt a permanent price and income policy in order to limit the increase in wages and prices.

SEE ALSO Aggregate Demand; Class, Rentier; Economics, Keynesian; Economics, Post Keynesian; Excess Demand; Expectations; Macroeconomics; Misery Index; Monetarism; Money; Money, Endogenous; Money, Exogenous; Phillips Curve; Policy, Fiscal; Policy, Monetary; Prices; Quantity Theory of Money; Real Income; Stagflation; Wage and Price Controls; Wages

BIBLIOGRAPHY

Camara, Alcino, and Matias Vernengo. 2001. The German Balance of Payment School and the Latin American Neo-Structuralists. In Credit, Interest Rates and the Open Economy: Essays on Horizontalism, ed. Louis-Philippe Rochon and Matias Vernengo, 143159. Cheltenham, U.K.: Edward Elgar.

Friedman, Milton. 1963. Inflation: Causes and Consequences, New York: Asia Publishing House.

Lavoie, Marc. 1992. Foundations of Post-Keynesian Economic Analysis. Aldershot, U.K.: Edward Elgar.

Rochon, Louis-Philippe. 1999. Credit, Money and Production: An Alternative Post-Keynesian Approach. Cheltenham, U.K.: Edward Elgar.

Rochon, Louis-Philippe, and Mark Setterfield. 2007. Interest Rates, Income Distribution, and Monetary Policy Dominance: Post-Keynesians and the Fair Rate of Interest. http://www.trincoll.edu/~setterfi/Rochon%20Setterfield%20I%20-%20complete%20paper.pdf.

Smithin, John. 1994. Controversies in Monetary Economics: Ideas, Issues, and Policy. Aldershot, U.K.: Edward Elgar.

Louis-Philippe Rochon

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Inflation." International Encyclopedia of the Social Sciences. . Encyclopedia.com. 27 Jul. 2017 <http://www.encyclopedia.com>.

"Inflation." International Encyclopedia of the Social Sciences. . Encyclopedia.com. (July 27, 2017). http://www.encyclopedia.com/social-sciences/applied-and-social-sciences-magazines/inflation

"Inflation." International Encyclopedia of the Social Sciences. . Retrieved July 27, 2017 from Encyclopedia.com: http://www.encyclopedia.com/social-sciences/applied-and-social-sciences-magazines/inflation

inflation

inflation, in economics, persistent and relatively large increase in the general price level of goods and services. Its opposite is deflation, a process of generally declining prices. The U.S. Bureau of Labor Statistics produces the Consumer Price Index (CPI) yearly, which measures average price changes in relation to prices in an arbitrarily selected base year. While the CPI is usually considered the most reliable estimate of inflation, some economists have questioned whether it overstates inflationary trends.

Inflation results from an increase in the amount of circulating currency beyond the needs of trade; an oversupply of currency is created, and, in accordance with the law of supply and demand, the value of money decreases. Deflation is brought about by the opposite condition. In the past, inflation was often due to a large influx of bullion, such as took place in Europe after the discovery of America and at the end of the 19th cent. when new supplies of gold were found and exploited in South Africa. In modern times wars have been the most common cause of inflation, as government borrowing, the increase in the money supply, and a diminished supply of consumer goods increase demand relative to supply and thereby cause rising prices.

Inflation stimulates business and helps wages to rise, but the increase in wages usually fails to match the increase in prices; hence, real wages often diminish. Stockholders make gains—often illusory—from increased business profits, but bondholders lose because their fixed percentage return has less buying power. Borrowers also gain from inflation, since the future value of money is reduced. Deflation, which historically has occurred in the downward movement of the business cycle, lowers prices and increases unemployment through the depression of business. Persistent deflation in Japan, beginning in the early 1990s, resulted in a drop in consumption, record unemployment, and general economic stagnation. Deflation in home prices after the financial collapse of 2008–9 (as opposed to deflation in goods and services prices) significantly reduced the value of the assets of many American households and proved a significant strain on the U.S. economy. An unusually steep and sudden rise in prices, sometimes called hyperinflation, may result in the eventual breakdown of an entire nation's monetary system. Among the notable examples of hyperinflation have been Germany in 1923, Yugoslavia in 1993–94, and Zimbabwe in 2008.

In the United States, annual price increases of less than about 2% or 3% are not considered indicative of serious inflation. During the early 1970s, however, prices rose by considerably higher percentages, leading President Nixon to implement wage-and-price controls in 1971. Stagflation–the combination of high unemployment and economic stagnation with inflation–became common in the industrialized countries during the 1970s. The costs of the Vietnam War and the social programs of the Johnson administration, plus the oil prices increases in 1974 by the Organization of Petroleum Exporting Countries (OPEC), contributed to U.S. inflation. By the end of the 1970s the Federal Reserve raised interest rates in an attempt to reduce inflation. Following a recession in the early 1980s, there was renewed growth, somewhat lower interest rates, and a decrease in the inflation rate.

During the early 1990s, a downward business turn created an international recession—without significant deflation—that replaced inflation as a major problem; the Federal Reserve lowered interest rates to stimulate economic growth. The mid-1990s saw moderate inflation (2.5%–3.1% annually), even with an increase in interest rates. By the late 1990s, U.S. inflation was low (1.9% by 1998), despite record growth; it tended to be somewhat higher (roughly 2%–3.5%) in subsequent years, due largely to increases in energy costs and, to a lesser degree, to large government deficits since 2001. Beginning in 2009, however, recession and a lackluster recovery led to much lower rates (typically less than 2%) and even to minor deflation in goods and services at times.

See J. Ahmad, Floating Exchange Rates and World Inflation (1984); A. J. Brown, World Inflation since 1950 (1985); T. S. Sargent, The Conquest of American Inflation (1999); R. J. Samuelson, The Great Inflation and Its Aftermath (2008).

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"inflation." The Columbia Encyclopedia, 6th ed.. . Encyclopedia.com. 27 Jul. 2017 <http://www.encyclopedia.com>.

"inflation." The Columbia Encyclopedia, 6th ed.. . Encyclopedia.com. (July 27, 2017). http://www.encyclopedia.com/reference/encyclopedias-almanacs-transcripts-and-maps/inflation

"inflation." The Columbia Encyclopedia, 6th ed.. . Retrieved July 27, 2017 from Encyclopedia.com: http://www.encyclopedia.com/reference/encyclopedias-almanacs-transcripts-and-maps/inflation

inflation

inflation A rise in the general level of prices in an economy which, if it continues, must bring about an increase in the money supply. Economists have offered a number of different explanations for inflation, and though it is generally accepted that excess aggregate demand is typically responsible (‘too much money chasing too few goods’), there is no accepted version of how this situation is created in the first place. A major axis of debate is about whether inflation is demand-led or induced by rising costs. Among the factors said to contribute to the latter are excess money-wage increases, administered price increases, import cost rises, rigidity in the distribution of investment and resources between industrial sectors, and inflationary expectations. What does seem clear is that, although inflation does not affect the real value of average living standards, it tends to redistribute real living standards among groups in an arbitrary way according to their ability to adjust the money value of their incomes to the general rise in the price—level. This engenders social tensions and conflict and these consequences have also attracted the interest of sociologists.

Though early sociological studies of inflation claimed to be addressing unexamined residual categories in economic theory, most later accounts sought not to displace, but rather to supplement the work of economists. The inflation—causing factors emphasized as the basis of difference between inflation—prone and price—stable industrial cultures may be classed as normative and structural. The normative argument, clearly influenced by Emile Durkheim's concept of egoism, is that in a market society, inequalities in income are not governed by some moral standard of a fair day's work for a fair day's pay. They reflect, instead, arbitrary variations in the market power of both individuals and organized groups. The extent to which resentment is engendered will depend on the degree to which there is a general acceptance of individualism and competitiveness as values in themselves. Resentment, in turn, sets off leap-frogging attempts by groups to advance their relative standing.

However, the effect of normative causes will be mediated by various structural factors, notably the extent to which the differential ability of groups to enhance their incomes is stabilized or regulated by law and institutional controls that promote trust between groups; the productive capacity of the economy, especially the degree to which claims are pursued against a surplus that is growing rapidly, or is fixed or increasing only slowly; and whether gains in profitability are reinvested in income-earning industrial capacity or siphoned off into financial speculation whose returns are not enjoyed by the workforce at large.

The best summary of the sociological literature on inflation is Michael Gilbert 's Inflation and Social Conflict (1986)
.

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"inflation." A Dictionary of Sociology. . Encyclopedia.com. 27 Jul. 2017 <http://www.encyclopedia.com>.

"inflation." A Dictionary of Sociology. . Encyclopedia.com. (July 27, 2017). http://www.encyclopedia.com/social-sciences/dictionaries-thesauruses-pictures-and-press-releases/inflation

"inflation." A Dictionary of Sociology. . Retrieved July 27, 2017 from Encyclopedia.com: http://www.encyclopedia.com/social-sciences/dictionaries-thesauruses-pictures-and-press-releases/inflation

Inflation

INFLATION


Inflation is a continuous rise in the price of goods and services. It is important to note that a rise in the price of just one or two items does not constitute inflation; nor does a one-time rise in all prices mark an inflationary period. To count as inflation, the price increases must be general throughout the economy and must continue over time. The hallmark of inflation is that money buys less than it once did. A cup of coffee that may have cost a dime at mid-twentieth century may cost a dollar some 50 years later.

Rising prices have been observed in most Western industrialized nations since the end of World War II (19391945). Economists, however, debate at which point inflation begins to pose a threat to society. If prices rise steeply and quickly enough, say, in the range of five to ten percent a year, inflation can undermine a nation's economic well being. The value of savings decreases, since the money saved will buy less and less over time. Senior citizens and others living on fixed incomes see their buying power erode. Inflation also means business owners must pay a steadily rising price for labor and raw materials, which cuts into profits. Eventually, rising prices can choke off economic growth, and lead to a recession.

The government can fight inflation by restricting demand for goods and services, usually by raising interest rates or imposing new taxes. Such measures tend to lead to higher unemployment, which dampens demands for goods and services and, in turn, brings down prices. Economists debate whether the cost of fighting inflation, e.g., higher unemployment and less growth, is worth the pain. Certainly a moderate amount of inflationary price increases, in the range of one to two percent per year, is viewed by many economists as not worth worrying about.

Inflation is measured by the government's cost of living index. The opposite of inflation is deflation, a steady decline in the level of prices over time.

See also: Cost of Living Index, Deflation

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Inflation." Gale Encyclopedia of U.S. Economic History. . Encyclopedia.com. 27 Jul. 2017 <http://www.encyclopedia.com>.

"Inflation." Gale Encyclopedia of U.S. Economic History. . Encyclopedia.com. (July 27, 2017). http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/inflation-0

"Inflation." Gale Encyclopedia of U.S. Economic History. . Retrieved July 27, 2017 from Encyclopedia.com: http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/inflation-0

inflation

in·fla·tion / inˈflāshən/ • n. 1. the action of inflating something or the condition of being inflated: the inflation of a balloon the gross inflation of salaries. ∎  Astron. (in some theories of cosmology) a very brief exponential expansion of the universe postulated to have interrupted the standard linear expansion shortly after the big bang. 2. Econ. a general increase in prices and fall in the purchasing value of money: policies aimed at controlling inflation | [as adj.] high inflation rates. DERIVATIVES: in·fla·tion·ism / -ˌnizəm/ n. in·fla·tion·ist / -nist/ n. & adj.

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"inflation." The Oxford Pocket Dictionary of Current English. . Encyclopedia.com. 27 Jul. 2017 <http://www.encyclopedia.com>.

"inflation." The Oxford Pocket Dictionary of Current English. . Encyclopedia.com. (July 27, 2017). http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/inflation

"inflation." The Oxford Pocket Dictionary of Current English. . Retrieved July 27, 2017 from Encyclopedia.com: http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/inflation

inflate

in·flate / inˈflāt/ • v. [tr.] 1. fill (a balloon, tire, or other expandable structure) with air or gas so that it becomes distended. ∎  [intr.] become distended in this way. 2. increase (something) by a large or excessive amount: objectives should be clearly set out so as not to duplicate work and inflate costs. ∎  [usu. as adj.] (inflated) exaggerate: you have a very inflated opinion of your worth. ∎  bring about inflation of (a currency) or in (an economy). DERIVATIVES: in·flat·ed·ly adv. in·fla·tor / -ˈflātər/ (also in·flat·er) n.

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"inflate." The Oxford Pocket Dictionary of Current English. . Encyclopedia.com. 27 Jul. 2017 <http://www.encyclopedia.com>.

"inflate." The Oxford Pocket Dictionary of Current English. . Encyclopedia.com. (July 27, 2017). http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/inflate-0

"inflate." The Oxford Pocket Dictionary of Current English. . Retrieved July 27, 2017 from Encyclopedia.com: http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/inflate-0

inflation

inflation In economics, continual upward movement of prices. Although normally associated with periods of prosperity, inflation may also occur during recessions. It usually occurs when there is relatively full employment. Under ‘cost-push’ inflation, prices rise because the producers' costs increase. Under ‘demand-pull’ inflation, prices increase because of excessive consumer demand for goods.

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"inflation." World Encyclopedia. . Encyclopedia.com. 27 Jul. 2017 <http://www.encyclopedia.com>.

"inflation." World Encyclopedia. . Encyclopedia.com. (July 27, 2017). http://www.encyclopedia.com/environment/encyclopedias-almanacs-transcripts-and-maps/inflation

"inflation." World Encyclopedia. . Retrieved July 27, 2017 from Encyclopedia.com: http://www.encyclopedia.com/environment/encyclopedias-almanacs-transcripts-and-maps/inflation

inflate

inflate XVI. f. pp. †inflate (XV) — L. inflātus, pp. of inflāre, f. IN-1 + flāre BLOW1.
So inflation XIV. — L.

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"inflate." The Concise Oxford Dictionary of English Etymology. . Encyclopedia.com. 27 Jul. 2017 <http://www.encyclopedia.com>.

"inflate." The Concise Oxford Dictionary of English Etymology. . Encyclopedia.com. (July 27, 2017). http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/inflate-1

"inflate." The Concise Oxford Dictionary of English Etymology. . Retrieved July 27, 2017 from Encyclopedia.com: http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/inflate-1

inflate

inflateabate, ablate, aerate, ait, await, backdate, bait, bate, berate, castrate, collate, conflate, crate, create, cremate, date, deflate, dictate, dilate, distraite, donate, downstate, eight, elate, equate, estate, fate, fellate, fête, fixate, freight, frustrate, gait, gate, gestate, gradate, grate, great, gyrate, hate, hydrate, inflate, innate, interrelate, interstate, irate, Kate, Kuwait, lactate, late, locate, lustrate, mandate, mate, migrate, misdate, misstate, mistranslate, mutate, narrate, negate, notate, orate, ornate, Pate, placate, plate, prate, prorate, prostrate, pulsate, pupate, quadrate, rate, rotate, sate, sedate, serrate, short weight, skate, slate, spate, spectate, spruit, stagnate, state, straight, strait, Tate, tête-à-tête, Thwaite, translate, translocate, transmigrate, truncate, underrate, understate, underweight, update, uprate, upstate, up-to-date, vacate, vibrate, wait, weight

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"inflate." Oxford Dictionary of Rhymes. . Encyclopedia.com. 27 Jul. 2017 <http://www.encyclopedia.com>.

"inflate." Oxford Dictionary of Rhymes. . Encyclopedia.com. (July 27, 2017). http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/inflate

"inflate." Oxford Dictionary of Rhymes. . Retrieved July 27, 2017 from Encyclopedia.com: http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/inflate