Q36. INFLATION

Inflation is a term that indicates a rapid increase in the general prices. Inflation means there is an increase in the cost of living.Inflation can be termed as sharp or low raise of general prices in economy of a country.It is measured in CPI-consumer price index.

CPI is an indicator that measures change in fixed costs of goods and various services.

CPIDUBAI publishes monthly current CPI.CPI is also called cost of living index.

Mainly,Inflation shows its effects on daily life as sharp rise in petrol prices,gas prices,electricity prices,etc.
Inflation has been raised to such a high level it started from (approximately) 0 to 23% in last half century.
BLS-bureau of labour statistics,united states defines CPI every month.It also provides a report including jobs created and which sectors are hiring for in last month.


Facts about inflation:
Inflation status in India and over other countries of the world:


Inflation rate in India in year 2010:
- 2010 Jan - 8.56%
-2010 Feb - 9.89%
- 2010 Mar - 9.90%
- 2010 Apr - 9.59%
- 2010 May - 10.16%- 2010 Jun - 10.55%
- 2010 Jul - 9.97%
-2010 Aug - 8.51%
-2010 Sep - 8.62%
-2010 Oct -9.70%
-2010 Nov -8.33%
-2010 Dec-9.47%

Current inflation rate till jun,2011 is 8.95%.

Yearly basis inflation ratings in various states:
CPI India-1.069%
CPI United States -1.4%
CPI China-5%
CPI Russia-6.7%
CPI United kingdom-3.3%
CPI Japan-0.7%
Formula to calculate CPI to know current inflation rate:
((B - A)/A)*100
Where ‘B’ is last year CPI and ‘A’ is current year CPI.

There is one other term related with inflation i.e.deflation
Deflation is opposite to inflation.it occurs when prices go down.it induces a negative figure (-0.0735% etc)as CPI.similar formula is applicable for deflation also.


Conclusion:
From this case study,I concluded that Inflation occurs when demand of services and goods exceeds total supply.As an example,there is more demand than supply of petroleum products.so that petroleum prices are rising day by day.recently,gold rates touched a new record of Rs.28000/-,and the reason is same here.our government must plan some strategy that empowers Indian economy.steps must be taken to improvise productivity.transparency must be encouraged.

SUBMITTED TO:
MR.GURDEEPAK SINGH
SUBMITTED BY:
KANAV BHALLA
MBA 1 (A)