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What is Inflation?

The topic of the hour has finally arrived and which is just hovering around globally at the moment. Let us share key facts regard inflation, it’s major impacts and measurement methodology etc.. Let’s first understand what does this terminology Inflation means. As the first three or four letters Inflation refers to as “increase in the prices of general commodities and services across globally”. In other words it refers to steep hike done by the manufacturers on the products and goods they deliver to general public based on highly volatile and changing economic and market trends. Needless to say that all economies globally are facing this serious issues, wherein certain are impacted positively other economies are facing the brunt of the attack due to this. So here comes an important and key point of discussion and guess what it should be. None other than the positive and negative aspects of the terminology Inflation. Let’s ponder upon the Negative streamlined effects of Inflation on rising economies like Japan, India, African economies etc. Nonetheless, though known to en-mass of people, the key impact of inflation are:

  • Recession: With the result in steep overload of price hike in the recent years and that of commodities, the biggest issue resulted is that of another dual terminology called recession. Recession refers to as slowdown of the economy and business cycle.
  • Unemployment at rise: With the advent of dual issues of recession and inflated price hike of commodities came the issue of unemployment which has lead many people to be laid down by top companies as in their terminology called as “Pink Slip” as they cannot afford to pay a good rate and have also reduced the wages/income of the people.
  • Hoarding: This is also a very major issue where people buy bulk stocks of perishable as well as non-perishable items and other goods for their use only, thus creating it’s shortage.
  • Essential commodities becoming dearer: Due to inflation manufacturers also have to bear huge losses, so they increase cost of commodities on the pretext of producing fewer goods thus acting as a monopolistic firm. Thus there is a two-three fold rice in prices of essential commodities and thus in turn poverty is at rise.

However inflation and recession are inseparable and keeps repeating in business cycle. The inflation rate is broadly calculated by the movement or change in a price index, usually known as consumer price index versus the average income rate of the economy. There are other measures as well such as measuring based on GDP, Regional and Asset price Inflation. Thus in all of this we can qualitatively come to a conclusion that inflation is a process of commodities prices becoming dearer based on market conditions prevailing and economic trends.

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