2. The persistent rise in the prices of goods
and services in an economy in a specific
period of time.
When the general price level rises, each
unit of the functional currency buys fewer
goods and services. Decline in the real
value of money.
Once prices have increased, they rarely go
back, even if the taxes are later reduced
3. An inflationary indicator that measures the change in
the cost of a fixed basket of products and services
Including housing, electricity, food, and transportation. it
is also called cost-of-living index.
Designed for those items which are mostly consumable in
daily life on the primary and secondary level these prices are
collected from whole sale markets as well as from mills at
organized wholesale market level
It covers the whole sale price of 106 commodities
prevailing in 18 major cities of Pakistan
4. The weekly change of price of 53 selected
items of daily use consumed by those house
holds whose monthly income in the base year
2000-01 ranged from Rs 3000 to above Rs12000
per month
Informs about the actual position of supply
whether the commodity is available in market or
not
5. Main reason of inflation is expectation.
Demand for non-development expenditures:
Decelerating Economic growth
Construction of houses
Increase in wages
Loose monetary policies
Depreciating Pak Rupee
6. Frequent adjustments in the administered prices
of Gas, electricity, POL (Petroleum, Oil and
Lubricants) products
Political instability
Population explosion
Black money
Consumption habits
Sick industrial unit
8. Setting of interest rates
Through Open market operations
Through the setting of banking reserve requirements
Monetary policy has to be forward looking
9. Taxation
Government expenditure
Encourage imports by lowering duties
Banning the export of essential items (pulses,
cereals, and oils to support the domestic
consumption)
