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what is the main reason for present high rate of inflation

2007-03-09 15:29:42 · 10 answers · asked by Anonymous in Social Science Economics

10 answers

Inflation really has only one root cause.....too much money trying to purchase too few goods....which in turn drives up prices

2007-03-09 15:34:03 · answer #1 · answered by SantaBud 6 · 0 0

Inflation rates are set by gov which changes the rules from time to time. This makes inflation arbitrary. Just like saying if we are in a recession. However, the economy is slowing because of high interest rates. The Fed can not lower interest rates because of inflation caused by long term raise in the money supply w/o real production gains nor increased productivity. The coming depression can only be helped by bring in new people from other countries. This cures Social Security and keeps GDP growing. The subprime melt down is another reason banks can not lower rates as more banks would fail.

2007-03-09 23:37:55 · answer #2 · answered by RayM 4 · 0 0

Who said the inflation rate is high? Fuel, energy and food components add to the volatility of prices. The rising cost of health care and education are concerns, but I wouldn't say we are dealing with "high" inflation. If inflation was a real threat the Fed would have raised the fed funds rate by now.

2007-03-09 23:58:44 · answer #3 · answered by econgal 5 · 0 0

The growth of IT industries had been increased drastically in recent past and still growing like a giant. The pay structure in IT is high as such a fresher is being paid 20k per month.

There is a proverb that THE PETROL PRICES ARE INCREASED DUE TO ONION PRICES.

Like wise the income increased for 1 industry had created lot of opportunities and threats. The inflation will further go higher. Till it comes to a stand, we just need to suffer. But, one day it will be controlled. ( Ref; Hyderabad & Cyberabad)

2007-03-09 23:42:25 · answer #4 · answered by Anonymous · 0 0

The rise in important energy resources, which is oill & gas.

This increment in prices gives dominos effect on all economic activities, push higher prices in cost of production, transportion , and ultimately the price of goods on the shelf .

This peculiar kind of inflation (CANNOT) is not advisable to be curbed by hiking interest rates as commonly used in the monetary policy tools.

2007-03-11 07:54:39 · answer #5 · answered by Anonymous · 0 0

there r several reasons for growing inflation-
firstly, there is disparity between demand and supply. we are havin supply bottlenecks while demand is on the rise. this leads to an increase in prices. this is specially relevent in context of 'not so good' performance of agriculture (which again because of several reasons).

moreover our fiscal deficit level is still very high and it is mostly high on account of unproductive causes like interests etc which fuels inflation.

2007-03-10 03:53:07 · answer #6 · answered by abcd 2 · 0 0

Currently inflation in the US is low.

2007-03-10 01:37:40 · answer #7 · answered by Anonymous · 0 0

there is one and only one reason for inflation -- increased money supply.

2007-03-09 23:34:55 · answer #8 · answered by Anonymous · 0 0

Corruption and weak financial policies of the government.

2007-03-09 23:35:50 · answer #9 · answered by Rajesh 3 · 0 0

when th national production is notlinearly proportional to national expenditure.

2007-03-10 00:55:01 · answer #10 · answered by ? 3 · 0 0

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