Inflation, Meaning, Types, Causes, Measures, Impacts

Inflation is the sustained increase in the general price level of goods and services in an economy over a period. It reflects the decrease in purchasing power, meaning each currency unit buys fewer goods and services. As inflation rises, each unit of currency buys fewer goods and services, effectively decreasing the purchasing power of money.

Economists typically measure inflation as an annual percentage change in a price index, such as the Consumer Price Index (CPI) or the Gross Domestic Product (GDP) deflator.

1. ee Inflation – Causes, Effects and Control Measures Name: Mahantesh Guddad Id no: PG21AGR13008 Department: Agricultural Economics

2. TABLE OF CONTENTS 01 02 03 04 05 What is Inflation Causes Measure of Inflation Effects Control Measures

3. What is inflation Rise in prices of the goods and services. Daily items such as food, clothing, housing, recreation, transport, consumer staples, industrial goods etc.

4. What Causes Inflation Cosh-push Inflation When production cost rise and the producers pass the increase on to consumers. Demand-pull Inflation When demand for goods increases and exceeds production capacity Higher wages Devaluation Increase in VAT Cut in Interest rates Increased money supply Inflation expectations

5. Excess circulation of money Value of money Decreases Deficit Financing War

6. Heat wave 2022 Heat wave conditions in march caused increasing local prices and lower supply And Increased fertilizer prices due to Russia – Ukraine crisis. Wheat inflation Wheat Production reduced due to fertilizer shortage and extreme heat waves The heatwave caused a reverse in policy by Indian government, from trying to import to address the crises, to halting exports.

7. Sri Lanka’s Economic Crisis Inflation in Sri-Lanka Historically weak finances Badly timed tax cuts Covid-19 Sri-Lanka Public Debt 119% of the GDP Sri Lanka Foreign Debt International Sovereign Bonds Asian Development Bank Japan China India Sri- Lanka’s 2019 GOVT Organic farming push led to food shortage & inflation Impact on country’s biggest export commodity- Tea.

8. Food articles Minerals & oil seeds Petrol Diesel LPG

9. Inflation Trends Wholesale Price Index- Annual average Source : Office of the Economic Adviser, Ministry of Commerce and Industry, Government of India. Consumer Price Index- Annual average

10. Effects of Inflation Distribution Debtors & Creditors Production Farmers Wage Earners Government Entrepreneur Investors

11. Russia-Ukraine crisis Crude oil Rupee depreciated and inflation rise Import bill rise Government absorbed part of crude spike through Excise cuts Cost-push Inflation Accomodative Monetary Stance Demand-pull Inflation Policy Repo rate increased to 4.90%

12. Control Measures Monetary measures Fiscal measures Quantitative tools Qualitative tools 1.SLR 2.CRR 3.Repo rate 4.Reverse repo rate 5.Bank rate 6.MSF 7.OMO Fixed Margin Requirement Moral Suasion Credit Control 1.Public Expenditure 2.Taxation