Institute of Cost and Management Accountants of Pakistan INFLATION Prepared For : Ministry of Economic Affairs Prepared By : Talha Arfi Registration# : 20090498 Date : Dec 08, 2010
2 STRUCTURE What is inflation? Inflation and our monetary system. Causes of inflation. Impact of inflation on our lives and society. Role of government to eliminate/ enhance inflation. Decline of our standard of lives due to inflation. Conclusion. Recommendations. Questions and answers.
What is inflation? 3 Rise in the prices of goods and services. Decline in the real value of money. Loss of purchasing power.
4Inflation and our monetary system Discount rate Consumer Price Index (CPI)
Causes of inflation 5 Excessive growth in the supply of money. Rise in production costs. International lending & National debts. Federal taxes on consumer products. Black money. Population growth. Deficit financing. Political Instability. Natural calamites. Food Inflation.
6Impact of inflation on our lives and society Impact of inflation on our lives : Hoarding. Distortion of relative prices. Cost of living. Fixed income recipients will feel the heat. Impact of inflation on society : Lowers national saving. Currency debasement. Unemployment. Poverty. Economic uncertainty.
7Role of govt. to eliminate/enhance inflation Monetary policies. Subsidies. Price system. Lift certain import controls. Increased interest rate. Inflation targeting. Regulate transfer of foreign currency reserves.
8Decline of our standard of lives due to inflation High prices. Financial problems. Less consumption.
Conclusion 9 Strategic planning to control inflation. Encourage domestic production. Investments in consumer goods. Subsidies for agriculture sector. Attract foreign investments. Monitoring system to evaluate the process.
Recommendations 10 Low steady rate of inflation. Money supply must grow faster than Real GDP. Reduce imports and increase exports. Price support programs. Provision of subsidies. Increase production. Controlled circulation of currency. Controlled foreign exchange policy Avoid use of luxuries.