Introduction What inflation is? Inflation is an increase in the price of a basket of goods and services that is representative of the economy as a whole. Subsequently‚ it will cause purchasing power fall. In simple terms‚ it means that too much of money is chasing for one particular item. When too much of money is available‚ the seller may raise the price of which he is willing to sell. In the long run‚ inflation has the potential of erasing the purchasing power of the people. It is because when
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Latest news Inflation remains a serious concern in India with the Consumer Price Index (CPI)-based inflation rising for the fifth consecutive month in February. At 10.9% from a year ago‚ consumer price inflation in India is the second highest among major economies—we still have some way to go before we can challenge Venezuela. Prices in the food‚ beverages and tobacco segment went up 13.4% from a year ago‚ a 33-month high. Vegetable prices have shot up 21% year-on-year. Core CPI inflation (ex-food
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INFLATION In economics‚ inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises‚ each unit of currency buys fewer goods and services. Consequently‚ inflation also decrease the purchasing power of money. Effects of Inflation on economy 1. Decrease Production: People buying less of goods and services as their income is limited. This leads to slowdown not only in consumption but also production. This is because
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INFLATION - ITS CAUSES and ITS EFFECTS ON VARIOUS SECTORS ON INDIA - September 2nd‚ 2010 WHAT IS INFLATION Defination: Inflation is defined as the rate at which the general level of prices for goods and services is rising and subsequently purchasing power is falling Measures of Inflation Inflation is measured by calculating the percentage rate of change of a price index‚ which is called the inflation rate. Consumer price indices Cost of living indices Producer price indices
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Objectives: How is inflation measured The calculation and limitations of these indices The effects of inflation Important points to remember: Consumer Price Index (CPI) - A measure of price changes in consumer goods and services such as gasoline‚ food‚ clothing and automobiles. The CPI measures price change from the perspective of the purchaser. GDP Deflator- measures price changes in current year compared to those in a base year‚ for all goods and services produced within the country and
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INFLATION The government control measures‚ all over the world‚ keep business cycles under control. What has gone nearly uncontrolled over the time is the problem of almost continuous increase in the general price level (this is the problem of inflation). The problem of inflation got accentuated since the early 1970s. It emerged as the most intractable economic problem for both theoreticians and policy-makeovers all over the world. Inflation has been a common problem of the developed and the developing
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Distinguish between microeconomics and macroeconomics • Identify the broad macroeconomic policy objectives of governments • Define the terms inflation‚ deflation and disinflation • Explain the calculation of the CPI • Examine the accuracy of the CPI as a measure of inflation • Discuss the causes and effects of inflation • Explain the policies for controlling inflation Micro and Macro Economics • Microeconomics is the branch of economics that concerns itself with the study and behaviour of consumers and
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First of all‚ when we speak about inflation‚ we should make clear what is the exact defination of it. Inflation is one of the most important economic concepts. At its most basic level‚ inflation is simply a rise in prices. Over time‚ as the cost of goods and services increases‚ the value of for example of a dollar is going to go down because you won’t be able to purchase as much with that dollar as you could have last month or last year. When the purchasing power of a currency starts to decline
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(b) Assess how monetary policy can be used to maintain a target of low inflation and currency stability in emerging markets? According to Jahan (2012)‚ monetary policy is the manner where the monetary authority uses to control the supply of the currency. The monetary policy objective of controlling the interest rate also takes an important role when government and monetary authority are dealing with the inflation (Shen‚ 2013‚ pp.199). The monetary authority usually is central bank with a certain
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Comparative Analysis of Inflation in Nepal and India Nepal Rastra Bank Research Department Baluwatar‚ Kathmandu 30 November 2011 Nepal Rastra Bank Research Department 30 November 2011 Comparative Analysis of Inflation in Nepal and India Background: Year-on-Year monthly variation of inflation‚ both in Nepal and India‚ seemed to be higher than expected at present situation. Inflation in Nepal is largely affected by rising food price in the country‚ which is a global phenomenon also
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