Inflation in Pakistan
Inflation in Pakistan. Its Types, causes, measures and effects
WHAT IS INFLATION? DISCUSS ITS TYPES, CAUSES, MEASURES AND EFFECTS.
Introduction:
Collective increase in the supply of money, in money incomes, or in prices refers to inflation. Inflation is generally thought of as an undue rise in the general level of prices.
Definition:
“Inflation is a situation whereby there is a continuous and persistent rise in the general price level.”
According to Meyer:
“An increase in the prices that occurs after full employment has been attained.”
According to Ackely:
“A persistent and appreciable rise in the general level or average of prices.”
According to Crowther:
“In the state of inflation the prices are rising i. e., the value of money is falling.”
According to Coulbourn:
“In inflation, too much money chases too few goods.”
Situation in Pakistan:
Today, inflation is one of the serious problems faced by Pakistan. Rate of inflation in Pakistan is very high. According to economic survey 2009-10, its rate is 13.3 %, while it was 22.3 % in last fiscal year. According to ESP 2011-12, rate of inflation (CPI) is 10.8%.
Explanation:
All above definitions are showing that inflation is a condition in which prices rise and money value decreases. Due to inflation the real value of money i. e., the purchasing power decreases.
TYPES OF INFLATION:
Following are the main types of inflation, which are different from one another due to their causes:
1) Demand Pull Inflation
This is demand side inflation. It simply means that when there is an increase in aggregate demand. Without any corresponding increase in aggregate supply the price level will rise.
2) Cost Push Inflation
It is supply side inflation. If there is increase in prices it will results in fall in aggregate supply. It is the reason of increase in cost of production.
3) Structural Inflation
Sometimes prices rise in an expanding economy because the supply cannot keep up with rising
WHAT IS INFLATION? DISCUSS ITS TYPES, CAUSES, MEASURES AND EFFECTS.
Introduction:
Collective increase in the supply of money, in money incomes, or in prices refers to inflation. Inflation is generally thought of as an undue rise in the general level of prices.
Definition:
“Inflation is a situation whereby there is a continuous and persistent rise in the general price level.”
According to Meyer:
“An increase in the prices that occurs after full employment has been attained.”
According to Ackely:
“A persistent and appreciable rise in the general level or average of prices.”
According to Crowther:
“In the state of inflation the prices are rising i. e., the value of money is falling.”
According to Coulbourn:
“In inflation, too much money chases too few goods.”
Situation in Pakistan:
Today, inflation is one of the serious problems faced by Pakistan. Rate of inflation in Pakistan is very high. According to economic survey 2009-10, its rate is 13.3 %, while it was 22.3 % in last fiscal year. According to ESP 2011-12, rate of inflation (CPI) is 10.8%.
Explanation:
All above definitions are showing that inflation is a condition in which prices rise and money value decreases. Due to inflation the real value of money i. e., the purchasing power decreases.
TYPES OF INFLATION:
Following are the main types of inflation, which are different from one another due to their causes:
1) Demand Pull Inflation
This is demand side inflation. It simply means that when there is an increase in aggregate demand. Without any corresponding increase in aggregate supply the price level will rise.
2) Cost Push Inflation
It is supply side inflation. If there is increase in prices it will results in fall in aggregate supply. It is the reason of increase in cost of production.
3) Structural Inflation
Sometimes prices rise in an expanding economy because the supply cannot keep up with rising