what makes inflation to rise in india?

Question

.is it for creating artificial scarcity of goodz
is it bcoz of stockexchange

Answer 1

both, neither.

Its supply vs demand and average available spending money.

In the US we have a bunch of nuts who think "minimum wage" is a good idea::::

They raise minimum wage.

The employer's costs to produce products goes up because labor cost went up.

The employer has to charge more for whatever they were producing. (and because there's hidden tax costs, the price goes up MORE than proportionally to the minimum wage increase)

So the price of products went up more than the average person's available spending money... so fewer products sell.

Because of lower sales, the employer has to lay off workers because he can't afford to pay them.

Guess who's first to get laid off?... the person who has the lowest pay.

Yep, minimum wage (especially when increasing it) really helps the poor, doesn't it?

Answer 2

Inflation occurs , when your money or currency devalue , meaning that you have to spend more for the same things, and in turn changes the whole balance of economics in a country, inflation is bad always, moderation is key.

Answer 3

too much wants and too little resource.

Answer 4

Tight monetary policy and various fiscal sops have failed to contain inflation as it jumped to a record level of 6.73 per cent during the week ended February 3 compared to 6.58 per cent for the previous week.

The prices have been pushed up by costlier primary items, mainly non-vegetarian food articles and some manufactured products.

The rise in wholesale prices-based inflation rate could be gauged from the fact that it stood at a mere 3.98 per cent in a year-ago period.

Among food articles, prices of some non-vegetarian products rose exorbitantly. For example, pork became expensive by 26 per cent, eggs were costlier by 7 per cent and mutton was available at 4 per cent higher prices.

Prices of urad, masur, moong , condiments, spices, fruits and vegetables, bajra , niger seed, cotton seed oil, rape and mustard oil, ground nut oil also rose.

However, the prices of barley, wheat, jiggery, suji , maida , atta and imported oils declined, as did the prices of aviation turbine fuel, naphtha, furnace oil and electricity. These are just provisional figures and if a trend of revising upwards provisional figures continue, the final figure may be even higher than 6.73 per cent.

For example, inflation during the week ended December 9, 2006, has been revised to 5.63 per cent from the provisional estimate of 5.32 per cent, according to official data released on Thursday.

This followed revision in wholesale prices index to 208.3 points from 207.7 points during the period. For the week ended February three, the index rose by 0.2 per cent to 209.2 points from 208.8 points during the previous week.

Inflation continued to rise much beyond RBI's projection of 5-5.5 per cent for this fiscal despite the apex bank announcing various measures to curb money supply and government taking various fiscal and price measures to augment supply of items as well as making them available at affordable prices.

Today itself, the Government cut petrol prices by Rs two a litre and those of diesel by Re one, effective midnight tonight. This was another move in a series of various steps taken by the Government and RBI to tame the rising inflation.

In its quarterly review of monetary policy at the end of last month, the RBI raised the overnight lending rate, Repo, by 0.25 per cent to make borrowing from the apex bank costlier. On Tuesday, the central bank announced 0.50 per cent hike in cash reserve ratio in two phases, which will suck out Rs 14,000 crore from the system.

These measures will take some time to have a cooling effect on inflation since CRR hike is yet to come into effect and increase in Repo rate had its impact on the decisions of banks only recently with four PSU bank announcing hike in interest rates from today.

However, the Finance Ministry's move to cut customs duty in various product categories of cement and metal last month, besides earlier CRR hike by RBI in December and January did not seem to have much effect.

'Urad' prices rose by one per cent during the week despite Forward Markets Commission banning it from futures trading along with 'tur'.

Among other pulses, prices of masur and moong also rose by one per cent along with condiments, spices, fruits and vegetables and bajra.

During the week, prices of cotton seed oil rose by 22 per cent, rape and mustard seed oil by 5 per cent and groundnut oil by 2 per cent.

However, prices of wheat declined by one per cent. The government recently announced a ban on wheat exports to augment its domestic supply. The decision will further pull down the prices of wheat.

Barley also became cheaper by one per cent.

In the Fuel, Power, Light and Lubricants group aviation turbine fuel prices dipped 11 per cent and prices of naphtha, furnace oil and electricity declined one per cent each.

In the non-food articles group, raw rubber witnessed a 5 per cent rise in prices. Soyabean and sunflower prices rose 3 per cent each, while prices of fodder and groundnut seed increased 1 per cent each.

Prices of hessian and sacking bags, timber planks, footwear western type, aluminium bars and rods, batteries, enamelled copper wires rose 5 per cent, 12 per cent, 4 per cent, 7 per cent, 9 per cent and 6 per cent respectively.

However, prices of imported edible oil dipped 2 per cent, while jiggery, sooji (rawa), and maida and atta prices decreased by one per cent each.