Inflation may be classified into peacetime inflation, war-time inflation and post-war inflation

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On the basis of time, inflation may be classified into (a) peacetime inflation, (b) war-time inflation and (c) post-war inflation.

1. Peace-Time Inflation:

By peace-time inflation we mean the rise in prices during normal period of peace. This type of inflation occurs when, in a less-developed economy, the government increases expenditure on development projects which normally have longer gestation periods.

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It means a gap arises between the generation of money income and the final availability of goods, this leads to a rise in prices.

2. War-Time Inflation:

War-time inflation occurs during a period of war. During war time, unproductive government expenditure increases and the prices rise because the increase in output does not keep pace with the expansion of expenditure.

3. Post-War Inflation:

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Post-war inflation occurs after the end of the war when the pent-up demand finds open expression.

Heavy taxes, which were imposed on the people during war time, arc withdrawn during postwar period. As a result the disposable income of the people abruptly increases without increase in the output. Hence the prices shoot up.

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