- Rate of Inflation is measured basing on the changes inward the WPI (Wholesale Price Index) inward India.
- WPI is made available on weekly basis.
- WPI is calculated past times the Economic Adviser, Government of India.
- Base twelvemonth for calculation of WPI is instantly shifted to 2004-05 course of education 1993-94.
Types of Inflation
- Demand-Pull Inflation : Inflation is due to excessive aggregate demand i.e., Aggregate demand is greater than aggregate supply.
- Cost Push Inflation : It is the inflation due to raising cost of inputs.
- Wage-Push inflation
- Profit included inflation
- Heavy indirect taxation
- Increase inward the costs of inputs as well as imported inputs such every bit raw-materials, fuel etc.
- Mixed inflation : Schultz i.e., both demand-pull as well as cost force factors
- Stagflation : A sustained increment inward price-level as well as rising unemployment
- India experienced stagflation inward 1991-94
- Hyper-Inflation or Galloping inflation : It is the virtually extreme inflation phenomenon, inward this seat coin looses all its value. This occurred inward FRG inward the twelvemonth 1926 as well as at acquaint inward Zimbabwe.
- In India, exclusively during the 1st innovation period, the full general cost grade recorded a fall.
- Highest inflation inward Republic of Republic of India is in 1974-75 – 25.2%
Causes of Inflation (General)
- Rapid growth of Population : There has been a continuous as well as large increment inward population since 1951 from 36.1 crore to 84.6 crore inward 1991 to higher upwards 100 crore now. As a number of this, the demand for basic essential goods has gone up, therefore contributing to cost rise.
- Increase inward incomes : Increase inward incomes of sizeable business office of population added to the demand for goods. This accompanied past times corresponding increment inward prices of consumer goods, raised the cost grade further.
- Rising authorities expenditure : The rising authorities expenditure or non-development plant has increased the coin receipts without increasing the render of consumer goods. This results inward rising prices.
- Deficit financing : GOI oft work deficit financing to duet the gap betwixt populace revenue as well as populace expenditure but a large dose during dull growth turns out to endure inflationary.
- Increase inward coin supply : An increment inward the coin render which exceeds the genuine expanding needs of the community leads to higher monetisation of the needs such every bit transactions. This is due to higher coin availability amongst the public.
- Inadequate agricultural production : This has resulted inward render non coming together demand. Several essential commodities every bit good every bit industrial raw materials are agriculture based. A brusque agricultural production fails to encounter the demands, therefore increasing the price.
- Inadequate industrial production : Inadequate production peculiarly of consumer products as well as of import agricultural as well as industrial inputs has resulted inward demand existence non met therefore increasing the price.
- Speculative stocks : The surround of rising prices results inward withholding of supplies at several points past times the speculative traders as well as producers who hoard goods inward lodge to sell after at higher prices. This activity results inward render non coming together demand.
- High priced imports : The import of diverse essential commodities similar petroleum, oil as well as lubricants, fertilizers as well as chemic products as well as nutrient grains is done at real high prices. This increases their prices as well as since these products are used inward diverse sectors such every bit transport, agriculture etc., the cost of these services likewise increases.
- Other factors : Other factors which leads to the cost increments are the income-tax laws, inability of dealing amongst taxation evasion, indirect taxes, dark marketing etc.