Advantages and Disadvantages of Inflation
Inflation has a different type of impact on every individual, the investors in real estate and stock markets enjoy inflation as the price of their assets increases they earn more profit. While on the other hand buyers that are planning to buy these assets wish that the inflation rate decreases so that they can buy these assets at a lower price. Inflation promotes growth and increases production capacity but also results in an increase in the value of goods and services. Inflation can be equally good or bad for an economy depending upon its rate of variation. Like if inflation is highly variable then it can badly affect the economy, while if it’s constant or slightly then it is a good sign for the economy of a nation.
Types of Inflation
Inflation can be simply defined as a decline in the value of a currency. Inflation directly affects the prices of essential goods and services. Also, it helps in calculating the increase in the price of certain goods and services in the past years. Inflation can be experienced when it requires more money to buy the same amount of goods. For example, if a pack of biscuits weighing 50 grams costs Rs. 5/Nos. in the year 2021 and the same pack of biscuits costs Rs. 8 in the year 2022 then it can be said that there is inflation. When a unit of currency can buy less than usual then it can be said that the nation is going through inflation. Inflation is measured in percentages, and the current rate of annual inflation in April of 2022 in India is 7.79%. Deflation is a state in which the prices of goods and services begin to fall with an increase in the value of the currency.
Read, What is Inflation
Table of Content
- Inflation and its Impact
- Types of Inflation
- How is Inflation Measured?
- Advantages and Disadvantages of Inflation
- Steps Adopted by the GOI to Tackle Inflation in India