Aarti Rai / New Delhi: Inflation or inflation is a general increase in the prices of various goods and services over time in the economy of any country. When the general price rises, there is a decrease in Purchasing Power. For any country, the situation of high rate of inflation or a sharp fall in it can prove to be harmful for the public and for the economy of the country.
The opposite of inflation is deflation
Economists believe that inflation is born out of printing more money than necessary than the economy. The opposite of inflation is deflation, that is, a situation in which there is a sharp fall in the prices of goods and services over time.
Inflation rate is measured on the basis of CPI
The retail inflation rate in India is measured on the basis of the Consumer Price Index (CPI). It measures price changes from the perspective of the buyer. It also reflects the change over time in the level of retail prices of selected goods and services at which consumers spend their income. Inflation is measured by the inflation rate. That is, the percentage of price increase from one year to the next.
When there is a fall in the value of money due to increase in the price of goods or services in a given period of time, it is called inflation. When inflation is expressed in percentage, it is called inflation rate or retail inflation rate. In simple words, it shows the pace of fluctuations in prices.
Due to increase in retail inflation rate
Food prices account for almost half of the inflation index of any country. Often an increase in the retail inflation rate is seen due to the increase in the prices of food items. Increase in retail inflation is mainly due to increase in prices of pulses and other food products. Apart from this, its growth has an effect on the prices of meat and fish products, oil, spices among other things.
impact on the economy of the country
Inflation has a major impact on investors. Also, it falls on the people of the fixed income group such as workers, teachers, bank employees and other similar classes. A very large section associated with this is the farming class, whose income is dependent on agriculture. The rise and fall of inflation has a huge impact on farmers. Lender of inflation affects both the creditor and the debtor.
Increase in public tax
Along with this, a big sector imports and exports which are affected in a big way. Public debt also increases due to inflation. Because when the price level rises, the government has to increase its expenditure on public schemes and the government takes loans from the public to meet the expenses. The government imposes new taxes to meet its expenditure due to inflation. It can also increase the old taxes. Which has a direct impact on our everyday life.