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Inflation

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  • 1. Inflation???Causes of InflationEffects of InflationKinds of InflationDemand pull InflationCost push InflationMap showing Inflation rates aroundthe worldReport on Food Inflation
  • 2. Inflation is a rise in the general level of prices of goodsand services in an economy over a period of time.When the general price level rises, each unit ofcurrency buys fewer goods and services. Consequently,inflation also reflects an erosion in the purchasingpower of money – a loss of real value in the internalmedium of exchange and unit of account in theeconomy.
  • 3. Causes of Inflation Increases in money supply Expansion of bank credit Deficit financing Black money Artificial Scarcity Population growth
  • 4. Effect of Inflation Debtors and creditors People with fixed income Consumers Producers and businessman Farmers Tax payers and government
  • 5. Kinds of Inflation Demand pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. Cost push inflation is a type of inflation caused by substantial increases in the cost of important goods or services where no suitable alternative is available.
  • 6. Demand pull Inflation Demand pull inflation may be due to Increase in money supply Increase in government purchases Increase in exports
  • 7. Cost push inflationCost push inflation may arise because of Increase in money wage rates Increase in money prices of raw materials.
  • 8. Inflation rates around the world in 2009ALASKA GREENLAND RUSSIA MONGOLIA CANADA USA CHINA BRAZIL UGANDA AUSTRALIA
  • 9. Economy of Asia During 2008-10Population 4 billion (60%)GDP US$24.077 trillion (2008)GDP (Currency) $16.774 trillion (2009)GDP/capita $7,041 (2009)GDP/capita $4,629 (2009)Annual growth of 7.9% (2010)per capita GDP:Millionaires (US$): 3 million (0.06%)Unemployment: 3.8% (2010 est.) *Most numbers are from the IMF. All GDP figures are in US$.
  • 10. Report on food InflationConsumer food inflation (CPI-Food) has remained benign sincelate 2009, reflecting the declines in wholesale food prices during2008-09, as well as weaker economic conditions. The CPI-Foodrose by a modest 0.2% during March 2010, the first increase in thefood inflation since August 2009. While inflation is currentlyabsent, consumer food prices are forecast to rise by 4.5% (vs. yearago) by the end of 2010 – the third highest rate posted in the past20 years. This compares to a decline of 0.5% during 2009, andgains of 4.9% and 5.9% registered during 2007 and 2008,respectively. The gain in consumer food prices is expected to bedriven by higher costs of wholesale and underlying commodityinputs, most notably protein, dairy and soft commodity prices.However, it is also important to recognize the important role thateconomic conditions played in driving consumer food prices – bothin pressuring food prices lower during 2009 and likely supportinghigher rates of food inflation during 2010.
  • 11. Made By:Anant Agarwal XI-D Roll No. 4