What is Inflation

Inflation

What is Inflation
What is Inflation
Inflation can be defined as a persistent rise in the general price of goods and services of common or daily use — such as clothing, food, fuel, transport, etc — which results in an increase in the cost of living.
 
Inflation is the measure of change in average price of services and commodities, done at regular intervals. It indicates a decrease in the purchasing power of a unit of a nation’s currency as the products and services get more expensive. Basically, inflation is the difference between aggregate demand and aggregate supply of goods and services. When aggregate demand exceeds the supply of goods at current prices, there is a rise in the price level.
 
A certain level of inflation is required in the economy to ensure that expenditure is promoted and money hoarding through savings is discouraged.
 
How is inflation measured?
 
In India, there are two main sets of inflation indices to measure changes in price levels — Consumer Price Index (CPI) and Wholesale Price Index (WPI). These indices measure changes at the retail and wholesale price levels, respectively. CPI tracks any shift in retail prices of essential and daily goods and services consumed by households across the country. In short, it captures changes in price level at the consumer level.
 
WPI, on the other hand, is the average change in the price of commodities at the wholesale level. It considers the price of goods traded among corporations, not goods purchased by consumers. The aim of WPI is to monitor price drifts that reflect demand and supply in manufacturing, industry and construction. 
 

Latest Updates on Inflation

Recurring food price shocks pose challenges in tackling inflation: Das

3 min read Last Updated :Feb 15 2024 | 3:47 PM IST
Image
Moderation in food prices cools WPI to 3 month low of 0.27% in Jan

3 min read Last Updated :Feb 14 2024 | 11:39 PM IST
Image
Government bonds, rupee weaken post higher than expected US inflation data

3 min read Last Updated :Feb 14 2024 | 11:32 PM IST
Image
US inflation slows, but price pressures are easing only gradually

4 min read Last Updated :Feb 13 2024 | 10:19 PM IST
Image
Price rise in majority of states and UTs lower than 5.1%, shows data

2 min read Last Updated :Feb 14 2024 | 1:43 PM IST
Image
ECB needs to start cutting interest rates soon, says Fabio Panetta

3 min read Last Updated :Feb 10 2024 | 7:39 PM IST
Image
RBI MPC: Repo rate kept at 6.5%; Q4FY24 inflation forecast lowered to 5%

4 min read Last Updated :Feb 08 2024 | 2:56 PM IST
Image
RBI MPC today: When, where to watch address of Guv Das and what to expect

2 min read Last Updated :Feb 08 2024 | 9:08 AM IST
Image
Inflation within tolerance, taking steps to check price rise: FM Sitharaman

3 min read Last Updated :Feb 06 2024 | 11:44 PM IST
Image
Too soon to declare victory over inflation: OECD tells central banks

3 min read Last Updated :Feb 05 2024 | 4:59 PM IST
Image
Retail inflation for industrial workers eases marginally to 4.91% in Dec

3 min read Last Updated :Jan 31 2024 | 7:50 PM IST
Image
Likely surge in prices due to Red Sea attacks, says finance ministry report

4 min read Last Updated :Jan 29 2024 | 11:22 PM IST
Image
UK's ruling party chairman hints at tax cuts in March and later in year

2 min read Last Updated :Jan 26 2024 | 9:01 PM IST
Image
No hint of cuts as ECB keeps rates unchanged at record-high of 4%

4 min read Last Updated :Jan 25 2024 | 11:19 PM IST
Image
Inflation slows in New Zealand to its lowest rate since 2021, shows data

2 min read Last Updated :Jan 24 2024 | 10:51 AM IST
Image
India to retain top economy title as govt spending stays strong: Poll

3 min read Last Updated :Jan 24 2024 | 8:38 AM IST
Image
BOJ signals conviction on hitting inflation target in hawkish tilt

5 min read Last Updated :Jan 23 2024 | 4:17 PM IST
Image
What does disruption to shipping in Red Sea mean for Europe's economy?

5 min read Last Updated :Jan 19 2024 | 12:19 PM IST
Image
Inflation needs to align with target by 2nd quarter: RBI monthly bulletin

4 min read Last Updated :Jan 18 2024 | 11:42 PM IST
Image
US import prices unchanged in December after two straight monthly decreases

3 min read Last Updated :Jan 17 2024 | 8:07 PM IST
Image