Many people acknowledge that inflation is an inevitable element of life. But, in economic settings, the opposite is true. It is known as deflation (Edward, 2016). Deflation is defined as a decrease in the price of products. Although, on the surface, it appears to some to be a positive economic condition, it is not. It indicates that the economic situation is deteriorating. Deflation is primarily defined by unemployment, which is influenced by pay decreases. Also, firm revenues fall during this period, making it more difficult to raise extra funds and advance in current technologies. The three main countries, which face inflation, are Venezuela, Iran, and Argentina (Patto, 2014).
Hyperinflation in Venezuela
According to Patto (2014), the inflation rate of Venezuela is 60.30%. There has been inflation in Venezuela as from 1973 to date. The country's inflation varies between 115.18% and 3.22%. This means that on two episodes, the annual rate has been over 100%. Currently, the country's inflation is on the increase and has been marked as a country of broke millionaires (O'Reilly, 2017). According to O'Reilly (2017), an individual in Caracas can courageously bag away 1000,000 bolivars, in terms of US currency, in his or her billfold, the 50 banks notes are worth only $400($US300) on the black market of the country and a single bill goes at below $8($US6). The most disgusting factor to Venezuela's citizens is perhaps the mid-1980s inflation situation. During this period, the annual inflation rate of the country has remained above 20 percent in most cases. The graph below illustrates the inflation rate in Venezuela.
Source: (Trading Economics, 2017)
Deflation in Iran
This this the other well-known second country after Venezuela with the highest inflation rate of 29.70% in the world (Patto, 2014) by 2014. Long before, the country has been experiencing high inflation rate of an average of above 50% since 1995. More several economies, a high sustained inflation rate is troublesome. According to Patto (2014), the economy of Iran is contradicting because it has a GDP of -5.5% in a period of the last one year. Actually, there is an economic regression in the Iranian economy. However, at present, there seems to be some light at the end of the tunnel as from the year 2013. Iran has been experiencing deflation after the election of President Hassan Rouhani who has vowed to bring down the inflation to a single digit (Salehi-Isfahani, 2015). According to Salehi_Isfahani of Iran Pulse, the president has reduced the inflation in Iran from 34.7% in 2013 to around 11.9% by last year. Due to this, there has been a stable exchange rate, food prices have declined, as well as the prices of other commodities. The exchange rate stability has reduced the prices of imports in Iran, though not a very good news to investors. The graph below illustrates the condition of deflation in Iran.
Source: (Trading Economics, 2017)
Inflation in Argentina
The inflation rate in Argentina is relatively benign as compared to Venezuela and Argentina. At present, the inflation rate in Argentina is 1.4%, which shows an upward rise from 2016, but still lower as compared to 26% by 2015 as reported by Patto (2014). Meaning from 1990 to 2015, Argentina would have qualified for hyperinflation. During this period an item would cost one Us dollar by 1989 and 203.62 a year later. Even though GDP has moved to around 5.5% with a very slightly elevated employment, inflation still remains high. The graph below shows inflation in Argentina.
Source: (Trading Economics, 2017)
References
Edward R. (2016). The Death of Money. New York: CreateSpace Publishing.
O’Reilly, A. (2017, January 19). Hyperinflation renders Venezuela a nation of broke millionaires. Fox News, pp. 2-4.
Patto, M. (2014, May 9). The Three Countries With The Highest Inflation. Retrieved from Fobes: https://www.forbes.com/sites/mikepatton/2014/05/09/the-three-countries-with-the-highest-inflation/#744984e1172e
Salehi-Isfahani, D. (2015, October 6). Is Iran's inflation deflating economic recovery? Iran Pulse, pp. 1-2.
Treding Economics. (2017, January 1). Venezuela Core Inflation Rate. Retrieved from Treding Economics: https://tradingeconomics.com/venezuela/core-inflation-rate
