The story of Inflation

Credits-Source:http://itpepper.com/post/Facts-behind-the-inflation-in-India.aspx

Centuries ago to do away with the shortfalls of the barter system the monetary system was born. Gold was used as a currency, the governments used to mint gold coins to provide stimulus to a sagging economy & increase the money supply in the economy, they adulterated the gold by mixing it with steel, silver to mint more coins. This led to artificial increase in money supply resulting into monetary inflation.

As we see it today ‘inflation’ is the increase in general price level of goods & services ,

So if
the inflation rate is 8%, a good costing Rs 100 today will cost you Rs 108 next year with no value-added. The value of money deteriorates over the period. So when I was a kid I used to buy a small packet of ‘cigarette sweets’( it was rage in those days, also posing with it we thought was really cool) for Rs 2, now the same packet costs Rs 10. So what does that tell you? The price has increased over 5 times…….this is inflation as I see it.

Today India is facing a dire issue of ‘Inflation’ the common-man is reeling over the pressures of ever-increasing prices. What can he do? Reduce his consumption of basic necessities? The rise in food prices due to intermittent rains, failing monsoons, rising crude oil prices results has put a strain on his resources. The rising inflation needs to be reigned in immediately but all the efforts by the RBI, in the past year, increasing the bank rates, repo & reverse repo rates have fallen flat.

Anyway an advice to all those investors, don’t keep idle funds, go & invest it & @ higher than the inflation rate, if you don’t want to get poorer by the day…

Read all you need to know about inflation(also a hot topic with job interviewers)-

http://crisistimes.com/inflation.htm

Interesting Related Fact:

Zimbabwe's inflation rate surged to 231,000,000% at one point making its entry into the Record Books.A bread costed $10million!!!