final inflation

7/31/2019 Final Inflation

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INFLATION

By

Group-9

By

Group-9


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CONCEPTS

INFLATION

DEFINATION GENERAL PRICE LEVELS

INCREASES

VALUE OF MONEY (PURCHASINGPOWER OF MONEY ) FALLS

MONEY CIRCULATION >PRODUCTION

PROBLEMS

PRICE RISE IS FASTER THAN INCOME

STANDARD OF LIVING DECLINES

MAJOR SOCIAL TENSIONS


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Inflationary Spikes

Hyper inflation

Stagflation

Disinflation

Deflation

Reflation

Term Related to Inflation


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Inflation data of past 5 year


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FIVE YEAR INFLATION TREND

Data source: www.rbi.gov.in


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METHODS OF CALCULATION

WPI CPIMeasure the temporal price change ofwholesale transactions of allcommodities in the country.

Measures the average price ofconsumer goods and servicespurchased by households.

The weights of items have beenassigned in proportion to their share inthe total value of transaction (output)in the economy

Weights are assigned in proportion totheir share in the consumptionexpenditure of the family of industrialworkers in the selected centers

Measures inflation at each stage ofproduction

Measures inflation only at final stage ofproduction.


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India, is amongst fewcountries of the world,which selected WPI as itsofficial scale to measure

the inflation in theeconomy.

Most of the majoreconomies like US, UK,Japan, France, Singaporeand even our arch rival

China have selected CPI asits official barometer toweigh its inflation


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Demand-pull inflationrefers to the idea that theeconomy actual demands more goods and services thanavailable. This shortage of supply enables sellers to raiseprices until an equilibrium is put in place between supplyand demand.

Thecost-push theory, also known as "supply shockinflation", suggests that shortages or shocks to the

available supply of a certain good or product will cause aripple effect through the economy by raising pricesthrough the supply chain from the producer to theconsumer. You can readily see this in oil markets. WhenOPEC reduces oil supply, prices are artificially driven up

and result in higher prices at the pump.

CAUSE OF INFLATION IN INDIA


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Contd..

Money supplyplays a large role in inflationarypressure as well. Low interest rates correspond with ahigh levels of money supply and allow for more

investment in big business and new ideas whicheventually leads to unsustainable levels of inflation ascheap money is available.


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EFFECTS OF INFLATION

Income Distribution

# wages earner

# producers#fixed income class

#borrowers and lenders

Employment


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CRUDE OIL PRICES AND INFLATION

Crude oil inflation

205

210

215

220

225

230

235

240

245

Jan Feb Mar Apr May Jun Jul Aug

Series2


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REMEDIES

1. Cash Reserve Ratio increased.

2. Control over Price of Petrol and Diesel.

3. Decreased import tariff.4. Tax increase

5. Cement price control.

6. Import duty on non-agricultural productswas brought down to 10% from 12.5%

7. Allowed appreciating the Rupee.


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CURRENT SCENARIO

. The inflation rate in India was recorded at 7.25

percent in June of 2012

Indias retail inflation, measured by the

Consumer Price Index, dropped marginally to

10.02% in June compared to 10.36% in theprevious month of May


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Thank you

final inflation

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