Understanding Inflation And Its Consequences.

Inflation is related to rising in the amount of goods and services constantly and fall in the purchasing power of the currency. Rise in the level of inflation can be good and can be bad for someone and it all depends on the viewpoint of the person. Rise in the prices of assets due to inflation can be a good thing for some people and fall of the currency can be a bad thing for a person who is dealing in cash transactions. Views can be different but the rise is constant in both the scenes. Rising inflation level has decreased the purchasing power of people and mainly middle class and the lower class people are most affected by the rise in inflation level in an economy. Measures have been taken by the bodies to control it but it is increasing with every day passing.

What consequences are we facing –

  • Mainly service class people and lower class people are dealing with this issue because the rise in the price of daily use items has increased which are affecting there monthly expenses.
  • People are finding it more difficult to go for a holiday to some other nation due to fall in the price of currency.
  • Low investment due to high prices is hindering economic development. Many businesses have come down due to high prices of materials.
  • The lending rate of banks are getting higher and people are finding it difficult to repay it back.
  • Unemployment is increased due to high inflation rates because organisations will find it difficult to afford any individual.
  • There is no such increase in the per capita income of the people.
  • Savings of the people are getting used up and it is becoming more difficult to survive.
  • Increase in the inflation rate impose some hidden taxes on us like if we purchase something we have to pay more taxes due to rise in the price of that commodity.
  • Nation’s exports are getting more expensive and it is affecting the balance of trade of the nation.

Although there are several measures taken by the government to stop this inflation rate but this is not slowing down even after using many fiscal policies and many other strategies. The consequences that we are facing today will become even worse in the coming future if no other big decisions are taken to slow it down. A complete analysis of everything should be done to know where we can do the cost cutting and use that money for our economic development. Rise in the per capita income, lowering the interest rate of banks so that people are more attracted to take personal na business loans, creating more job opportunities, allocating more resources towards people’s welfare will bring a little change in this picture and it will definitely help in the economic development of the nation. These problems are most common in underdeveloped countries and in the developing countries. Most of the developed countries are always prepared for all these kinds of situations. 

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