“INFLATION” is an situation of speedy and generous or constant boost in the level of prices along with subsequent detoriations in the rate of money above a period of point in time. A condition in which the measurement of money is declining, that price are getting higher.

The conduct of universal prices is measured throughout price incidies.The movement of prices indices reveal the route of inflation or deflation in the financial system. As Lener says, a price rise which is unpredicted and not correct is inflationary.

Thus, inflation is statiscally measures in expressions of percentage increase in the price indicators, as a charge percent unit of time , usually time or month.

generally, the wholesales prices index’s (WPI’s) figures are used to evaluates inflation. otherwise, the consumers prices indexs (CPI’s) or the cost of livings indexs numbers can be adopt in measures the price of inflation.

TWO MAIN TYPE OF INFLATION :-

â-.DEMAND PULL INFLATION

â-. COST PUSH INFLATION.

1. DEMAND PULL INFLATION- AS PER the demand pull theory price increased in reply to an surfeit of the collective demand more than accessible supplies of goods , sevices. therefore increased rates,also follows by grow in wages , hence increased rates. This lead’s to risen in factor expenditure ,increased income which leaded to growth in demand raised price .

Causes:-

â- raise in public expenses , increased in money supply.

â-Increased in investment’s increased In price’s.

â-Increased in subsidiary proclivity consumed.

â-Increased Export’s and supplies BOP’s

â-changing Resource’s from the consumer’s product region to the capital goods sector’s or the military zone.

COST PUSH INFLATION:-IN THIS THEORY a rised in wages’s leads to a risen in the totality cost of production and a consequent rise in price level , because prices are based on costs. It has been said that a rise in wages causing a risen in prices:-

Which would increase ehusiasm the workers to demand higher wages and thus increase;s cost’s.

Definitely every increase’s in cost’s such a risen in the price’s of import’s components or increased in indirect tax’s, may initiated a cost push inflation’s firstly , it is waged push pressure’s which tend’s to accelerated the risings priced spiraled

CAUSES OF INFLATION

â-above expantions of money supplied

â-quick expansion’s of bank credit’s

â-High doses of arrears Financing may causes reckless spending.

â-Continuous increase in public expenses especially growth of defence and non- develop expenses .

â-Black money.

â-High indirect tax.

NON MONETARY FACTORS CAUSING INFLATION:-

â-High population growth.

â-Natural calamities and bad weather condition.

â-Speculation and Hoadings

â-High prices of import.

â-Monopolies : profits and unfair trade practice.

â-Underutilization of resources

Home

INFLATION TREND IN INDIA

To calculate the inflation rate india use the wholesale price index (WPI).The use of WPI measure the changes inaverage price level of goodstraded in wholesale market.In india a total of 435 commodities of data in price level is tracked through WPI which is an indicator of movement in price of commodities in all trade and transactions.In recent speech by subir Gokran . RBI Deputy Governor . threw interesting light on the growth-inflation circle of the Indian economy and the “policy commitment to maintain a balance between growth and inflation in the short run, while forcing high growth with lower inflation over long period of time”. In another speech. Deepak mohanty Executive dir the sector at RBI, experience the nine incident of double eight inflation has reduced over time “,He points to the fact that despite recent rise in food prices , inflation inflation rate are going downward trend in india in recent decades.

TREND OF INFLATION FROM 1991 TO 2012 IN INDIA

Let us see that the rate of inflation in india, we called this the rate of inflation based on the consumer price index, or( CPI) for short. The Indian CPI shows the change in price of a standard package of goods and services which Indian households buy for consumption. For measuring inflation, an detail information is made of how much the CPI has risen in percentage terms over a given period compared to the CPI in a preceding period.