The document discusses inflation and its effects. It defines the Consumer Price Index (CPI) as measuring average price changes in a basket of goods and services over time to indicate inflation. Due to inflation, goods and services cost more so purchasing power decreases, financial planning is difficult, and pensioners and those on fixed incomes are particularly impacted. Inflation can also spur wage-price spirals as unions demand higher pay to offset higher costs, potentially fueling further inflation. The document lists inflation rates for various countries from 2012, with India having the highest rate of 9.3%.

1. Simply Speaking
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3. Consumer Price
Index (CPI):
Consider a basket of goods
and services used by
households in an economy
CPI measures the average
changes in the prices of
goods and services in this
fixed basket over a period of
time
Measurement of
Inflation

4. How does it affect the economy ?
Due to the rise in prices, you have to shell out more money to
obtain the same amount of goods and services than you did
prior to the inflation
Financial planning becomes difficult as the value of money
decreases with inflation. It affects certain groups more than
others compared to those who are currently employed.
Example, pensioners
People tend to save less in an economy affected by inflation
because the price of services and goods are high
Inflation often provokes the trade unions, to demand a pay
rise. However, such a rise may increase spending, leading to
further price increases. It becomes a vicious cycle, and is
termed as the wage-price spiral

5. Inflation, not all that bad!!

6. • Norway – 0.7%
• Sweden – 0.9%
• USA - 2.1%
• UK – 2.8%
• Germany – 2.1%
• Brazil – 5.4%
• Russia – 5.1%
• China – 2.6%
• India – 9.3% Statistics as of 2012 by Central Intelligence Agency, USA
https://www.cia.gov/library//publications/the-world-
factbook/fields/2092.html
Inflation rates of countries
around the globe