Repressed inflation

Updated: Aug 20, 2021

Inflation which exists when the state of the economy is essentially inflationary – aggregate demand for goods and services exceeds the aggregate supply, and so, other things being equal, prices would tend to rise – but the rise in prices is not allowed to happen. An example would be a perfectly effective prices and incomes policy, which prevented prices of goods, services and factors of production rising. Most economists would argue that if the underlying disequilibrium of aggregate supply and demand is allowed to remain uncorrected, inflation will not be repressed for long, since no administrative mechanism will be sufficiently comprehensive to control the tendency for prices (including wages) to rise in one way or another.

Reference: The Penguin Dictionary of Economics, 3rd edt.

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James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.