What is inflation | why inflation occurs | Types of inflation | Inflation good or bad | Exclusivetalksforyou

 What is Inflation ?

Inflation is a rise in prices over time, that means increase in price level of goods and services in an economy known as Inflation. It is typically measured as the percentage change in the consumer price index (CPI) over a certain period, such as a year. Inflation can affect the value of money, as the purchasing power of a currency  decreases as prices rise.

Why Inflation occurs ? causes of Inflation ?

There are so many factors that can contribute to  the inflation. One is an increase in the supply of money. When the central bank increases the money supply, there is more money available to be spent we won't sit silently right we go here and there and buy everything, which can lead to higher demand for goods and services and, in turn, higher prices. This is known as Demand-pull Inflation

Another factor that can contribute to inflation is an increase in the cost of production. For example, if the cost of raw materials or labor increases, businesses may need to raise prices in order to cover their costs. This can lead to inflation, this known as cost-push inflation

Inflation can also be caused by external factors, such as a decrease in the value of a country's currency. When a country's currency becomes weaker, it takes more of that currency to purchase the same goods and services as before, leading to higher prices called built-in inflation

Inflation good or bad ?

There are both positive and negative consequences of inflation. On the positive side, inflation can encourage people to spend money sooner rather than later, as they expect prices to rise in the future. This can help stimulate economic activity. On the negative side, inflation can lead to an erosion of the value of people's savings and make it harder to plan for the future.

Inflation is generally considered to be a normal part of a healthy economy, as long as it remains within a certain range. Central banks, such as the Federal Reserve in the United States, RBI in India often have a target inflation rate that they aim to maintain. They may use a variety of tools, such as adjusting interest rates, to try to achieve this target.

Overall, inflation is an important economic concept that can have significant effects on the value of money and the overall performance of an economy. It is important to understand how inflation works and how it can be managed in order to make informed financial decisions.