What are usually the main causes of inflation?

Answer 1

"Inflation: Generally rising price levels" The main measurements to monitor inflation are aggregate output, unemployment, and price levels.

The most comprehensive measure of the economic activity is real GNP. Estimates are released quarterly. Although real GNP is realested as a dollar figure, the most important feature is its rate of growth. Thus, if real GNP grows at an annual rate of 4% during a quarter, that is considered a fast pace of economic activity.

The most important number released on a monthly basis is the unemployment rate. A 5.5% rate of unemployment is considered both politically acceptable as well as indicative of no inflationary pressures.

The GNP deflator is the most popular measure of the Price Level. It is a weighted average of prices of all goods and services produced in the economy. It is released quarterly along with data on GNP. A rate of increase in the deflator of 3% or 4% on an annual basis has been considered acceptable.

Two somewhat narrower measures of inflation are released monthly; the consumer price index (rate of change in prices goods bought by the typical consumer), and producer price index (price changes at the wholesale level). The consumer price index is popular for watching inflation because it measure how inflation influences each of us directly in our role as consumers (although the GNP is a more precise method).

Answer 2

For the answer you have to go back alittle in period, to know the root cause.

The Britishers had an uncanny way,to make huge amounts and left us pennyless. They introduced the OCTROI system,by
which any produce, passing from one district to another, had to stop at the various checkpoints, pay a levy, then proceed.

This resulted in agriculture produce becoming spoilt and unfit for consumption.Other products were not accepted by consignees due to delay.Costs increased due to lorry waiting charges and extra fuel consumption.Add to that the actual octroi, the graft that was paid,and since the graft had no receipt, this was still hiked up and added to product value.

So, slowing down delivery time from Consignor to Consignee was the paving stone of Inflation.

The latter day barons were the hoarders, black marketeers, wholesale agents(whom we now respectfully call C&F Agent),
Govt.cancelling permits of such manufacturing units that did not grease palms of their partymen and supporting only the greasers, resulted in prices being pushed upwards.

Shortages in any comodity is supposed to be made good by the Govt by imports to subdue the rising local markets.But vested parties do not do so, as a smaller quantity fethes far more gains with a larger margin.

Take the case of Cotton. After partition of the country, 73% of cotton growing areas went to Pakistan who had only 34% of spinning Mills. Compare that to India having 27% cotton growing areas with 66% spinning mills.

On the initiative of late Mr.Jawaharlal Nehru, the green revolution yeilded far fetched results.Cultivation of cotton commenced in full swing in Andhra,Karnataka, Maharashtra, Gujerat, Punjab, & Rajasthan, tothe extent that by fiscal year 1975-76 India carried forward a closing stock of 23 lakh bales of cotton, after meeting
its entire spinning requirements.

Even with spinning capacity increasing by more than 71% since Independance, the country was self sufficient, with buffer stock of 6 months in the eventuality of new crop`s failure, PLUS A SURPLUS OF 35 Lakh bales WHICH WAS EXPORTED.

If similar programs are made & followed sincerely, the root cause of inflation can be weeded out.

Answer 3

now a days people r earning more and spending like any thing, supply is more and demand is also more.As huge amount of money is rotating in the market and government is doing nothing to control it, so this is the main cause of inflation

Answer 4

Inflation is a measure of increase in prices of commodities in a nation which than are dependent on the primary factors like cost of crude oil, economic growth, interest rates.

Answer 5

We the people are the main reason we have to encounter inflation. We as in the government which consist of humans, whom make bad judgment calls and us as the voters who put these people in office to screw up. We as voters need to be better educated, and teach our babies; our future how to handle business more economically correct and keep the country out ot trouble. CAN'T WE ALL JUST GET ALONG!

Answer 6

If people earn good money but don't spend it slows down the economy. Lack of money in circulation sends up interest rate and causes inflation.

Answer 7

1.mARKET CONDITIONS.
2.LESS OF DEMAND.
3.SUPPLIERS ABILITY
4.DUE TO THREAT OF OTHER COMPANIES.
5.SUDDEN INTODUCTION OF MANY COMPANIES PRODUCING
WORTHABLE PRODUCTS BOTH IN PRICE ND QUALITY.

Answer 8

http://www.bized.ac.uk/virtual/economy/policy/outcomes/inflation/inflws1.htm
check it here.