THE INFLATION

Inflation is ranked as one of the biggest problems of the economy, many economistsconsider inherent to the model of capitalist development, but even in the communist system was also presented this phenomenon.

It consists of a general and continuous increase in the price level in an economy. It isan economic phenomenon that manifests itself through a relative decline in the value of money, ie the reduction in purchasing power due to a rise in prices relative to the amount of goods and services can be purchased with the same .

Overall inflationary process is initiated by various causes, one of the most common ofwhich is caused by a significant imbalance between supply and demand, ie when forvarious economic pressures demand for goods and services exceeds the available supply of them at current prices, or when supply is limited by low productivity ormarket restrictions.

Deflation involves a continued decline in the general level of prices, as happenedduring the Great Depression of the 1930s, usually accompanied by a prolongeddecline in the level of economic activity and high unemployment.

However, widespread falls in prices are not current events and less on Colombia,which have always existed inflationary processes with rates have reached 35%,much lower than those reported in South American countries and despite being a bitmore now controlled, therefore not be regarded as one of the major problems that hasaffected our country.