Inflation refers to a general increase in the prices of goods and services in an economy, resulting in a decline of the purchasing power of money. It occurs when there is too much money chasing too few goods. The effects of inflation depend on its speed and can include rising import prices, lower savings, redistribution of wealth, and discouragement of investment. To control inflation, governments employ monetary policies like increasing interest rates and restricting money supply growth. Fiscal policies like reducing spending, increasing taxes and adopting surplus budgets are also used. Other measures include increasing production, implementing rational wage policies, and controlling prices. Currently, India's inflation rate is around 6% annually, with historical highs of 34% and lows of -11

1. MOHIT GOEL (PGDM-FINANCE)

2. Definitions :
“Inflation is an increase in the quantity of purchasing power.”–
What is Inflation?
Gregory
Inflation is the stage of too much money chasing too few goods.”-Coulbourn
Meaning :
Inflation is a global phenomenon. It takes place because of rapidly
rising prices of goods and services, resulting in the decline of the
value of money.
The rate at which the general level of prices for goods and services
is rising, and, subsequently, purchasing power is falling.

3. TYPES OF INFLATION & EFFECTS

5. Effects of Inflation
Effect depends on the speed of inflation and the nature of
the economy.
 Rising prices of imports
 Lowers national saving
 Redistribution of Income & Wealth
 Collapse of Monetary system
 Adverse impact socially and politically
 Discourages Investment & savings
 Higher Interest / Income tax rates

6. Control Measures

7. Monetary Policy:
Monetary Policy
essentially implies the policy
followed by financial
institutions.
High interest rates and
slow growth of the money
supply are the traditional
ways through which central
banks fight or prevent
inflation.

8. Fiscal Measures
Reduction in unnecessary
expenditure.
Increase in Taxes.
Increase in savings
Adopt Surplus
Budget(collecting more
revenue and spending less).
Stop Repayment of Public
Debt until inflationary
pressures are controlled.

9. Other Measures
To increase Production
Rational Wage Policy
Price Control

10. Present Scenario
COUNTRY CATEGORY DATES
INDIA
INFLATION
RATE
1969 –
2013
ACTUAL
HIGHEST
LOWEST
6.46
34.68
-11.31
The inflation rate in India was recorded
at 6.16 % in December-2013.
From 1969 until 2013,
India Inflation Rate averaged 7.7%
Highest
34.7%September -1974
Lowest
-11.3 % in May -1976
The average inflation of India in
2013: 11.04 %
UNIT
PERCENT
FREQUENCY
MONTHLY