Inflation refers to the increase in prices of any goods and services, whether essential such as food, clothing, housing rent, property (apartments, land) prices, transport (cabs, buses, trains), or non-essential such as cosmetics, jewellery, cars, etc.
Let’s consider a real-life scenario to understand inflation. Suppose the public transport (buses, trains) of a city stops for a month because the drivers are protesting demanding an increase in their salaries. What will happen? A lot of people ( let’s assume around 60% people of a city) are dependent on public transport and when they aren’t operational, they think of other options to go to their workplaces right? And it is cabs and autos, right?
This content is locked
Upgrade to Subscription - Reading Program to unlock this content!
The opposite of inflation is deflation. It happens when the price of a commodity falls, which occurs rarely.
Now you know that inflation has a direct impact on the economy of a country.
To learn about Economy, click here.
Power Words :
- Cascading effect
- Interest rate
- Price index