Inflation Hits India

Thu, 06 Nov 2008 08:45:41 EST

Inflation rate or per cent is the rise of prices of general consuming goods and services in any economy. The term inflation also referred to increases in the money supply called monetary inflation; however, economic debates about the relationship between money supply and price levels have led to its primary use today in describing price inflation. It can cause adverse effects on the economy for example, uncertainty about future inflation may discourage investment and saving. Inflation may widen an income gap between those with fixed incomes and those with variable incomes.

Due to global crisis started on media from the fall of Wall Street not only affected United States western allies in Europe but also hitting his Asian partner India who is in double trouble as inflation is rising more than 10.72 per cent at the end of forty forth week of this year. The annual rate of inflation, measured by movement in the wholesale prices, was 10.68 per cent a week ago. It was at 3.11 per cent in the corresponding period a year ago. Measuring inflation in an economy requires objective means of differentiating changes in nominal prices on a common set of goods and services, and distinguishing them from those price shifts resulting from changes in value such as volume, quality, or performance.

After declining for five consecutive weeks, inflation showed a marginal increase as certain essential items especially dairy based products in the manufactured category became expensive. Among other articles in the manufactured group, prices of sugar increased, while woolen clothes became expensive by one per cent. Moreover, prices of automobiles, including motorcycle, bikes, and autos increased in the last week. Surprisingly on the other hand the prices of spices and cement prices showed a decline. Steel and fuel prices remained unchanged. The revised figure for inflation stood at 12.38per cent for the week ended August 30 as against 12.10 per cent during the corresponding period last year.

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Inflation Hits India