Inflation 2009-10


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Inflation 2009-10

  1. 1. INFLATION<br />
  2. 2. GROUP MEMBERS<br />Roshan Vaidya 56 <br />Pranali Vedak 57<br />Aditi Verma 58<br />Neha Vora 59<br />Siddhesh Waghela 60<br />Rakesh Ware 61<br />
  3. 3. SYNOPSIS<br /><ul><li>Introduction
  4. 4. Definition
  5. 5. Rate of inflation
  6. 6. Types of inflation
  7. 7. Forms of inflation
  8. 8. Causes of inflation
  9. 9. Measures of inflation
  10. 10. Consequences of inflation
  11. 11. Consumer price index
  12. 12. Wholesale price index</li></li></ul><li>INTRODUCTION<br /><ul><li>Inflation is defined as a sustained increase in the price level or a fall in the value of money.
  13. 13. It is measured as a rate percentage per unit time, say a year or month.
  14. 14. When the level of currency of a country exceeds the level of production, inflation occurs.
  15. 15. Value of money depreciates with the occurrence of inflation.</li></li></ul><li>DEFINITION<br /><ul><li>According to C.CROWTHER, “Inflation is state in which the value of money is falling and the prices are rising.”
  16. 16. In economics,the word inflation refers to general rise in prices measured against a standard level of purchasing power.</li></li></ul><li>RATE OF INFLATION<br />Rate of inflation is the rate of change of the general price level. It is measured by simple formula:-<br />Rate of inflation t=Pt-Pt-1 Pt-1<br />Where, Pt=price level in the year t<br />Pt-1=price level in the year t-1,the base year<br />If there is a decline in the rate of inflation such a situation is called DISINFLATION.<br />
  17. 17. INDIA INFLATION RATE<br /> India inflation rate stands at 11.49 percent year-over-year. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. <br />The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy. <br />. The economy has posted an average growth rate of more than 7% in the decade since 1997, reducing poverty by about 10 percentage points. <br />
  19. 19. TYPES OF INFLATION<br /><ul><li>Open inflation
  20. 20. Suppressed inflation
  21. 21. Creeping inflation
  22. 22. Galloping inflation
  23. 23. Hyper inflation</li></li></ul><li>FORMS OF INFLATION<br /><ul><li>Demand-Pull inflation
  24. 24. Cost-Push inflation
  25. 25. Stagflation
  26. 26. Deflation</li></li></ul><li>CAUSES OF INFLATION<br />FACTORS ON DEMAND SIDE:<br /><ul><li>Increase in money supply
  27. 27. Increase in disposable income
  28. 28. Deficit financing
  29. 29. Foreign exchange reserves</li></li></ul><li>Contd……<br />FACTORS ON SUPPLY SIDE<br /><ul><li>Rise in administered prices
  30. 30. Erratic agriculture growth
  31. 31. Agricultural price policy
  32. 32. Inadequate industrial growth</li></li></ul><li>CONSEQUENCES OF INFLATION<br /><ul><li>Adverse effect on production
  33. 33. Adverse effect on distribution of income
  34. 34. Obstacle to development
  35. 35. Changes in relative prices
  36. 36. Adverse effect on the B.O.P</li></li></ul><li>MEASURES OF INFLATION<br /><ul><li>Monetary policy
  37. 37. Fiscal policy
  38. 38. Wage control
  39. 39. Price control
  40. 40. Indexation</li></li></ul><li>CONSUMER PRICE INDEX<br />A consumer price index (CPI) is a statistical estimate of the level of prices of goods and services bought for consumption purposes by households. <br />The change in the CPI is a measure of inflation, and can be used for evaluation of wages, salaries, pensions, or regulated or contracted prices. <br />The CPI is one of the most important products of national statistical offices. <br />The consumer price index numbers of Maharashtra for agricultural labourers and rural labourers registered the highest increase of 27 points.<br />
  41. 41. WHOLESALE PRICE INDEX<br /><ul><li>The Wholesale Price Index (WPI) was first published in 1902.It consists of over 2,400 commodities.
  42. 42. The Wholesale Price Index or WPI is the price of a representative basket of wholesale goods.
  43. 43. The Wholesale Price Index focuses on the price of goods traded between corporations, rather than goods bought by consumers, which is measured by the Consumer Price Index. </li></li></ul><li>COMPOSITION OF WHOLESALE PRICE INDEX<br />The wholesale price index comprises of the following indices:<br />Domestic Wholesale Price Index (DWPI)<br />Export Price Index (EPI)<br />Import Price Index (IPI)<br />Overall Wholesale Price Index (OWPI)<br />The WPI covers five commodity groups - agriculture; manufacturing; quarrying; import and export; and mining.<br />
  44. 44. FEATURES OF WHOLE SALE PRICE INDEX<br /><ul><li>It captures the price movement extensively and therefore taken as a indicator of inflation.
  45. 45. The index is published weekly with the shortest possible time gap of two weeks.
  46. 46. It is used to analyze the market activity and the monetary conditions in an economy.
  47. 47. It focuses on the changing nature of the economy of different kinds of services such as railways, road transportations, telecommunications,etc.</li></ul> These features highlight the utility of this index in monitoring ongoing changes in an economy in order to suggest the need for any adjustment.<br />
  48. 48. CONCLUSION<br />