The annual percentage increase in the price of goods and
services is termed as INFLATION. That means we have to pay inflated price for
same good or service in future and you would be able to buy smaller percentage
of good or service. Due to this the values of money decreases day by day and
our purchasing power also.
Suppose if any good cost 100INR now and assume that we have
4% inflation then we have to pay 100+4=104 INR for same good next year.
In the same way if general level of prices are falling then
we say there is DEFLATION.
Prices or inflation are mostly controlled by Demand and
Supply. If the demand of particular good or service is more than its supply
then people would like to pay more for the same. This cause inflation. Sometimes
the company who is producing the goods or giving the service has to increase
the cost to maintain the margin.
So is Inflation is bad, as it eats up the value to money? Inflation
is sign of growing economy. If economy of any country grows it generate jobs
and increases the purchasing power. People like to complain about prices going
up, but they often ignore the fact that wages should be rising as well. The
lack of inflation may be an indication that the economy is weakening. So the
answer of the question is not easy, it depends on the economy as well as your
personal situation.
Historic inflation India - CPI inflation
Year
|
inflation
|
Year
|
inflation
|
|
2016
|
5.22 %
|
2006
|
5.79 %
|
|
2015
|
5.88 %
|
2005
|
4.25 %
|
|
2014
|
6.37 %
|
2004
|
3.77 %
|
|
2013
|
10.92 %
|
2003
|
3.81 %
|
|
2012
|
9.30 %
|
2002
|
4.31 %
|
|
2011
|
8.87 %
|
2001
|
3.77 %
|
|
2010
|
12.11 %
|
2000
|
4.02 %
|
|
2009
|
10.83 %
|
1999
|
4.84 %
|
|
2008
|
8.32 %
|
1998
|
13.17 %
|
|
2007
|
6.39 %
|
1997
|
7.25 %
|
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