“something which decides economy of the country” (UPDATION THROUGH PRESENTATION) INFLATION
TABLE OF CONTENTMEANINGDEFINITIONTYPES OF INFLATIONCAUSESEFFECTSHOW TO CALCULATE INFLATION RATEEXAMPLECHARTINFLATION IN NEWS PAPERREMEDIES
Rise in PriceIt is a rise in the general pricelevel caused by animbalance between the quantityof money and tradeneeds.
The word "inflation" originally applied solely to thequantity of money.It meant that the volume of money wasinflated, blown up, overextended.
According to Pigou “ Inflation arises whenmoney income is expanding more thanproportionate to income earning activity”.
Types of inflation (Rise in price) ,1) Creeping inflation 2) Walking inflation3) Running inflation 4) Galloping inflation
Creeping inflation:-The inflation of a nation increases gradually, but continually,over time.Wa l k i n g i n f l a t i o n : -When the price rise is moderate. It is a warning signal for thegovernment to control it before it turns into running inflation.
Running inflation:- A rapid acceleration in the rate of rising prices more than 10% per annum is referred as Running InflationGalloping inflation:-Prices rise by double or triple digit inflation rates like 400% or999% per annum.
1)Demand pull inflation(ex: petrol)2)Cost push inflation(ex: cement)3)Over- Expansion of Money Supply4)Increase in Population5)Expansion of Bank Credit6)Black Money7)Poor Performance of Farm Sector
EFFECTS OF INFLATION BENEFITS LOSES• DEBTORS • CREDITORS• ENTREPRENEURS • FIXED INCOME GROUPS• FARMERS • CONSUMERS• UPPER INCOME GROUPS • MIDDLE AND LOWER INCOME GROUPS
Calculation of inflation: New price – Old price = Old price * 100For instance:- Inflation for today’s petrol price. Old price = 70 New price = 75 75-70 = 70 * 100 = 7.14%
Inflation will come down to 6-7 percent by March: PranabIn the next 6 to 12 months as the government has taken anumber of fiscal and monetary measures to address theissue of demand-supply mismatch, the main reason behindgeneral price rise.
Sonia asks govt to provide relief to commonman
Inflation likely to fall to 7% by March 2012: Rangarajan Dr C. Rangarajan, Chairman,(Prime Minister’s Economic Advisory Council.)
REMEDIES1. Cash Reserve Ratio increased.2. Control over Price of Petrol and Diesel.3. Decreased import tariff.4. Tax increase5. Cement price control.6. Import duty on non-agricultural products was brought down to 10% from 12.5%7. Allowed appreciating the Rupee .