Inflation Crises and its impacts on Inflation.

1. INFLATION CRISIS AND ITS
IMPACT ON INFLATION
PROF. KANCHAN KUMARI

2. CONTENTS:
 Introduction of Inflation
 Definition of Inflation
 Major causes of Inflation
 Inflation- Types
 Inflation Crises?
 Negative Impact of Inflation Crises
 Positive Impact of Inflation
 Inflation In India
 Impact on Inflation in India caused due to Russia Ukraine War
 Impact on Inflation Globally
 Impact on Inflation crises in Argentina
 Measures to Control Inflation

3. INTRODUCTION OF INFLATION
 In economics, inflation is a rice in general level of prices of goods and
services in a economy over a period of time. When the general price level
rises, each unit of currency buys a fewer goods and services.
 Inflation is a measure of the rate of rising prices of goods and services in an
economy.
 Inflation is a situation where too much money chases too few goods.
 It is imbalance between money supply and Gross Domestic Product.
 Inflation is measured by the Consumer Price Index (CPI) in India

4. DEFINITION OF INFLATION
 According toWebster’s “An increase in amount of currency in circulation, resulting
in a relative sharp and sudden fall in its value and rise in prices: it may be caused
by an increase in the volume of paper money issued or of gold mined, or relative
increase in expenditures as when the supply of goods fail to meet the demand”.
 According to Prof. Samuelson “Inflation occurs when general level of prices and
cost are rising.

5. MAJOR CAUSES OF INFLATION
• Primary Causes- when the demand for a commodity exceeds its supply, then the excess
demand pushes the price up.
• Increase in Public Spending- Govt. spending increases which invariably creates inflationary
pressure on the economy
• Deficit Financing of Government Spending- in order to incur the extra expenditure, the
Government resorts to deficit financing.
• IncreasedVelocity of Circulation- he total use of money = the money supply by the Government
x the velocity of circulation of money.
• Population Growth- excessive demand creates inflation
• Hoarding- Hoarders are people or entities who stockpile commodities and do not release them
to the market.
• Genuine Shortage- supply is less than the demand, leading to an increase in prices and
inflation.
• Exports- total production must fulfill the domestic as well as foreign demand, If it fails

6. INFLATION-TYPES
 Demand Pull Inflation- Demand-pull inflation causes upward pressure on prices
due to shortages in supply. Ex- Government investment
 Cost Pull Inflation- when there is a decline in the supply of goods and
services and demand remains unchanged or even grows. Ex- Oil and Gas
 Built in Inflation- referred to as a wage-price spiral.

7. INFLATION CRISES?
 Product shortages resulting from the global supply-chain problems, itself largely
caused by the COVID-19 pandemic
 The inflation crisis of 2021/22 is a global phenomenon, with almost every economy expected
to experience inflation rates far higher than two percent across 2022.
 Inflation is currently high across many areas of the globe, even in regions that have not
witnessed high inflation for several decades
 Global supply chains have been blocked up since the start of the pandemic, while the war in
Ukraine has exacerbated food and energy shortages.

8. NEGATIVE IMPACT OF INFLATION CRISES
 Real Income falls for group with fixed Income
 Income Distribution Inequality Rises
 Disturbs the Planning Process
 Increased Speculative Investment
 Lenders Will Sustain Losses
 Rupee may depreciate
 Export Earnings Suffer as a Result

9. POSITIVE IMPACT OF INFLATION
 Increased Profits for Producers
 Increased Investment Returns
 Increase in production output
 Increased Employment and Earnings
 Shareholders income increases
 Governments tax revenue improves

10. INFLATION IN INDIA
 India's retail inflation for April 2023 expected at 4.79%: CNBC-TV18 Poll.
 According to CNBC-TV18 poll, the CPI inflation rate for April stands at 4.79
percent,
 According to CNBC-TV18 poll March's figure was 5.66 percent.

11. IMPACT ON INFLATION IN INDIA CAUSED DUETO
RUSSIA UKRAINEWAR

12. IMPACT ON INFLATION GLOBALLY.

13. Impact on Inflation crises in Argentina
 Inflation in triple-digit territory is wiping out Argentines' paychecks, shrinking
their buying power and consumer spending.
 The drought is destroying Argentina's key commodity exports — soy, corn and
wheat — that are essential to growth, jobs and tax revenue.
 annual inflation rate just hit 104%.

14. MEASURESTO CONTROL INFLATION

15. THANKYOU!
PROF. KANCHAN KUMARI