What is a normal or healthy rate of inflation?

Answer 1

NOT MORE THAN 2 % IF ANY POSSIBLE.

If rate of inflation exceedes 4 % this will be most dangerous.

A rate of inflation between 1 and max 3 % is NECESSARY to
prevent economic breakdown. If that occurs, DEFLATION will
start to ruin it seriously, as in 1930

Answer 2

There is no clear cut rate of inflation that is healthy. The most important thing is that it is predictable. Otherwise, it makes investing highly uncertain and the more uncertainty that investors face, the less investment that you get. Investment is important because it increases future production and therefore future living standards in an economy.

However, from a policymakers perspective, low rates of inflation are easier to control and do help with investment decision making since if inflation is low, most people can ignore it when making everyday decisions. This suggests that zero inflation would be the best. However, changing economic circumstances mean that prices should be constantly changing to reflect these circumstances. However, some prices are 'sticky', especially in the downwards direction. Consequently, even when it is desireable from a whole of economy perspective for a particular price to fall, it doesn't (or may not fall quickly enough). One way to get around this is to have a small amount of inflation, sine then, even if the price in $ doesn't fall, the fact that everything else goes up, means that the relative price falls and it is the relative price that matters most for economic efficiency and well-being across an economy.

Therefore, many countries have adopted 'inflation targetting'. In New Zealand there is a target ofless than 2%. In Australia it is for inflation to be between 2% and 3%. Try searching the web for 'inflation target' and 'inflation targetting' if you need to know more.

Answer 3

None at all , the only reason why we have inflation is because the government wants to pay off their debt so they mint more money which makes the value of the dollar go down.

Answer 4

http://en.wikipedia.org/wiki/Misery_Index_(economic)

Answer 5

3.3%