Difference between Inflation and Recession

Inflation is referred to as the situation when the price level of goods and services rise, which leads to decline in the purchasing power in the economy or in other words decreases the buying power of the money.

Recession is said to be a period of negative growth. In this situation, there is an overall decline in the economic levels of the economy. Recession is confirmed to happen when there is a fall in the Gross Domestic Product (Real GDP) of the economy.

Recession is characterised by rising unemployment levels, fall in price of assets, decreasing price of commodities that results in low consumer confidence in the economy.

Let us look at some of the points of difference between inflation and recession.




Inflation is defined as the increase in the price levels of goods and services in an economy

Recession is said to be a period of slowing down of the economy indicated by negative growth

How it is measured

Inflation is measured by two indices, CPI (Consumer Price Index) and Wholesale Price Index (WPI)

Recession is measured by the reduction in the Gross Domestic Product of a nation

Time Period

Inflation occurs on an ongoing basis in the economy

Recession occurs due to the presence of certain economic conditions

This article was all about the topic of Difference between Inflation and Recession, which is an important topic for Commerce students. For more such interesting articles, stay tuned to BYJU’S.

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