A gradual and sustained rise in the general price level of goods and services within an economy is termed “creeping inflation.” This type of inflation is characterized by a slow and predictable rate of increase, typically remaining in the single digits annually. For instance, a country might experience a 2% to 3% annual increase in its Consumer Price Index (CPI) over several years, indicating a controlled inflationary environment.
Maintaining a low and stable inflationary environment offers several potential advantages. It can incentivize spending and investment, as consumers and businesses anticipate that prices will modestly increase over time. Furthermore, it provides central banks with greater flexibility to implement monetary policies aimed at stimulating economic growth during periods of recession. Historically, many developed economies have strived to maintain inflation rates within a defined, low target range to promote overall economic stability.
