Langtímaverðbólga

Langtímaverðbólga refers to a sustained and consistent increase in the general price level of goods and services in an economy over an extended period, typically several years or more. It is distinct from short-term price fluctuations, which can be caused by temporary factors like seasonal demand or supply chain disruptions. This prolonged rise in prices erodes the purchasing power of money, meaning that the same amount of money buys fewer goods and services than it did previously.

The causes of long-term inflation are multifaceted and can include factors such as excessive money supply growth, persistent increases in aggregate demand that outstrip supply capacity, rising production costs (cost-push inflation), and ingrained inflationary expectations among consumers and businesses. Central banks often aim to maintain a low and stable rate of inflation, as moderate inflation can be a sign of a healthy, growing economy. However, very high or unpredictable inflation can have detrimental effects, leading to economic uncertainty, reduced investment, and a redistribution of wealth. Governments and monetary authorities use various tools, such as adjusting interest rates and managing the money supply, to try and control long-term inflation and keep it within desirable bounds. The measurement of long-term inflation is typically done through consumer price indices (CPI) or other price indexes that track a basket of common goods and services.