Inflation, the filling of money circulation channels with paper money over and above actual economic requirements, which leads to its devaluation; a means of redistributing national income and social wealth in the interests of the ruling classes under capitalism, a method of intensifying the exploitation of labour by capital. It is manifested in the rapid spontaneous growth of prices, especially the price of mass consumer goods. Inflation most of all affects the working class, for devaluation increases the price of consumer goods above that of nominal wages. Inflation also has a negative impact on small producers, since the prices of their output increase more slowly than those of the products of large capitalist enterprises. Moreover, their money savings lose their value. Inflation also affects the position of people on fixed incomes, such as office employees, teachers, pensioners, etc. Inflation is usually the result of budget deficits, when the capitalist state begins to intensively issue paper money, as it is in no position to cover its increasing expenditures resulting from wars and economic upheavals through taxes, loans, etc. This tends to sharply devalue money in relation to gold, commodities, and foreign currency. ( Circulation channels can also be overflown without any additional emissions of paper money, for example, because of the curtailed volume of production). During the general crisis of capitalism and comprehensive heightening of its contradictions, when gold is taken out of circulation and credit money is no longer exchanged for gold, inflation becomes universal and chronic. The growth of inflation is largely encouraged by the activities of the monopolies which try to constantly raise the price of their products. In capitalist practice, a difference is usually made between creeping inflation, which is expressed in the continuous and constant growth of prices, and galloping inflation, under which prices increase rapidly and spasmodically. Depending on the degree to which inflationary processes extend to particular regions of the capitalist world, inflation is divided into world, embracing several countries, and local, developing within one country. Since the 1960s, inflation in the capitalist world has been accompanied by economic crises and slumps in production, and rising unemployment; this is called stagflation. Such trends were very clearly seen during the deep crisis of 1974-75, when the decline in production and tremendous growth in unemployment were accompanied by snowballing prices and higher inflation. Inflationary processes continued into the next few years. In 1981 prices increased in the developed capitalist countries by an average of 130 per cent as compared with 1970, or by 50 per cent as compared with 1978. Fearing the 165 destructive socio-economic consequences of inflation, the imperialist state tries to regulate it. However, the permanent instability of the capitalist economy, particularly its financial and credit sphere, and the crisis of the monetary system make inflation a characteristic phenomenon of today’s capitalist world, ultimately undermining its foundations and heightening its antagonistic socio-economic contradictions.