{"id":4415,"date":"2022-07-13T12:37:05","date_gmt":"2022-07-13T12:37:05","guid":{"rendered":"https:\/\/rakshithpai.com\/?p=4415"},"modified":"2022-08-17T08:58:33","modified_gmt":"2022-08-17T08:58:33","slug":"inflation-impact-on-economy","status":"publish","type":"post","link":"https:\/\/rakshithpai.com\/inflation-impact-on-economy\/","title":{"rendered":"Inflation and its impact on Indian Consumers:"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-662c7696ad592\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\" style='display:none' id=\"ez-toc-cssicon-toggle-item-662c7696ad592\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/rakshithpai.com\/inflation-impact-on-economy\/#What_is_Inflation\" title=\"What is Inflation?\">What is Inflation?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/rakshithpai.com\/inflation-impact-on-economy\/#What_is_Consumer_Price_Index\" title=\"What is Consumer Price Index?\">What is Consumer Price Index?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/rakshithpai.com\/inflation-impact-on-economy\/#What_is_Shadow_Inflation\" title=\"What is Shadow Inflation?\">What is Shadow Inflation?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/rakshithpai.com\/inflation-impact-on-economy\/#10_Common_Effects_of_Inflation_on_Consumers\" title=\"10 Common Effects of Inflation on Consumers:\">10 Common Effects of Inflation on Consumers:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/rakshithpai.com\/inflation-impact-on-economy\/#Poor_Middle-Class\" title=\"Poor &amp; Middle-Class\">Poor &amp; Middle-Class<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/rakshithpai.com\/inflation-impact-on-economy\/#Purchasing_Power\" title=\"Purchasing Power\">Purchasing Power<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/rakshithpai.com\/inflation-impact-on-economy\/#Unemployment\" title=\"Unemployment\">Unemployment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/rakshithpai.com\/inflation-impact-on-economy\/#Recession\" title=\"Recession\">Recession<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/rakshithpai.com\/inflation-impact-on-economy\/#Stock_Market\" title=\"Stock Market\">Stock Market<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/rakshithpai.com\/inflation-impact-on-economy\/#Real-Estate\" title=\"Real-Estate\">Real-Estate<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/rakshithpai.com\/inflation-impact-on-economy\/#Debt\" title=\"Debt\">Debt<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/rakshithpai.com\/inflation-impact-on-economy\/#Interest_Rates\" title=\"Interest Rates\">Interest Rates<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/rakshithpai.com\/inflation-impact-on-economy\/#Economy\" title=\"Economy\">Economy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/rakshithpai.com\/inflation-impact-on-economy\/#Deflation\" title=\"Deflation\">Deflation<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/rakshithpai.com\/inflation-impact-on-economy\/#Conclusion\" title=\"Conclusion:\">Conclusion:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/rakshithpai.com\/inflation-impact-on-economy\/#FAQs\" title=\"FAQs:\">FAQs:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/rakshithpai.com\/inflation-impact-on-economy\/#Watch_YouTube_Video_For_More_Information\" title=\"Watch YouTube Video For More Information:\">Watch YouTube Video For More Information:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/rakshithpai.com\/inflation-impact-on-economy\/#Also_read\" title=\"Also read:\">Also read:<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Inflation\"><\/span><strong>What is Inflation?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Inflation is nothing but \u201ctoo much money following too few goods\u201d. It is an act of inflating the money supply. <\/strong>It is to print more money into circulation. Thus, when few goods &amp; services are produced, the money you hold becomes less in value.&nbsp;<\/p>\n\n\n\n<p>All around the world, inflation is taking hold. Inflation in industrialized nations, including the United States and the United Kingdom, has hit 40-year highs despite growing commodity prices. What&#8217;s going on here, exactly?&nbsp;<\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-1 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;background-color:#e4fa00;color:#0f0027\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p>Despite the fact that the pandemic looks to be over, the world is going to be afflicted. Rates have fallen since the outbreak of the epidemic, indicating plenty of demand and consumption.&nbsp;<\/p>\n\n\n\n<p><strong>Costs have increased as a result of a growth in consumer expenditure and an increase in the purchasing power of consumers. <\/strong>There are two sides to every coin. Because of problems in the supply chain, the gap between supply and demand is getting bigger, not smaller.<\/p>\n\n\n\n<p>Inflation is surging all across the world in this setting. (Reuters) In June, inflation in Turkey hit 78.6%! Consumer price inflation in India was 7.04 percent in May, by way of reference.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Consumer_Price_Index\"><\/span><strong>What is Consumer Price Index?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Inflation refers to an increase in the overall cost of goods and services.<\/strong> Using a metric known as the Consumer Price Index (CPI), the official rate of inflation is calculated (CPI). For a certain period of time, the CPI measures how much it costs to live comfortably. It does a decent job of doing this, just like other economic metrics.<\/p>\n\n\n\n<p>Amongst many ways of calculating inflation, <strong>The CPI is the most popular measure of inflation. CPI stands for Consumer Price Index, which measures the monthly change in the price of a basket of consumer goods.&nbsp;<\/strong><\/p>\n\n\n\n<p>These goods are regularly consumed by the vast majority of the population and hence any change in price is considered important. The difference noted for a hike or drop in price from one month to another is called inflation or deflation.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Shadow_Inflation\"><\/span><strong>What is Shadow Inflation?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Shadow inflation, as the name suggests, hides amongst the goods &amp; services produced. thus, it is much harder to capture in the CPI. Basically, anything outside the purview of CPI is known as \u2018Shadow Inflation\u2019.&nbsp;<\/p>\n\n\n\n<p>To put it simply, <strong>&#8220;shadow inflation&#8221; refers to a sort of inflation that can&#8217;t be measured by the CPI. The price may have stayed the same, but the quality of the product or service may have gone down.<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"ast-oembed-container \" style=\"height: 100%;\"><iframe loading=\"lazy\" title=\"Shadow Inflation &amp; its effects on the Consumers?!? #Shadow #inflation\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/YjurPZgh-JI?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<\/div><\/figure>\n\n\n\n<p><strong>For example:<\/strong> If you buy a chocolate bar for Rs.10 weighing about 100 grams. In the case of CPI, either the weight of the bar may be reduced to 80 grams, or the price is increased to Rs.15 per bar. Such difference is easily noticed.<\/p>\n\n\n\n<p>But, in the case of \u2018shadow inflation\u2019, the quality of the chocolate bar will be compromised. So, you are consuming the same chocolate bar worth Rs.10 weighing 100 grams. But, it won\u2019t taste the same for the quality of the bar is reduced. Such difference is called shadow inflation.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-2 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;background-color:#e4fa00;color:#0f0027\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p><strong>Thus, Shadow inflation is an instance when you pay the same price for a good or service from one year to the next, but the quality has diminished.<\/strong><\/p>\n\n\n\n<p>Shadow inflation can be noticed amongst many consumer &amp; household goods. The transition of the material from being a quality product to one that\u2019s not soo quality product is mild and hence cannot be noticed immediately.&nbsp;<\/p>\n\n\n\n<p>Check any product that is from the pre covid period and the ones produced now. You may find the difference.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"10_Common_Effects_of_Inflation_on_Consumers\"><\/span><strong>10 Common Effects of Inflation on Consumers:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Poor_Middle-Class\"><\/span><strong>Poor &amp; Middle-Class<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Inflation affects the poor and the middle-class population disproportionately. <\/strong>Poor &amp; Middle-class people have a very little cushion of savings and with the rise in the cost of living due to inflation, the entire segment of the population will be left with reduced savings and an impact on consumption.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Purchasing_Power\"><\/span><strong>Purchasing Power<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>It is said that Inflation is like a Cancer to one&#8217;s Wealth.<\/strong> Because inflation eats away from the inside! With the rise in inflation, the first thing that is noticed is an impact on purchasing power. Anything that used to cost less is not costing more or the goods &amp; services quality has been diminished. Consumers lose purchasing power as and when the cost of goods rises.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Unemployment\"><\/span><strong>Unemployment<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Usually, inflation can lead to economic growth and job creation at times. But, <strong>a prolonged inflationary economy could lead to stagflation. Such a scenario calls for excess job cuts. Thus, mass unemployment can be noticed.&nbsp;<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/07\/Inflation-and-its-impact-1-1024x576.jpg\" alt=\"\" class=\"wp-image-4422\" width=\"1182\" height=\"665\" srcset=\"https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/07\/Inflation-and-its-impact-1-1024x576.jpg 1024w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/07\/Inflation-and-its-impact-1-300x169.jpg 300w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/07\/Inflation-and-its-impact-1-768x432.jpg 768w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/07\/Inflation-and-its-impact-1.jpg 1280w\" sizes=\"(max-width: 1182px) 100vw, 1182px\" \/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Recession\"><\/span><strong>Recession<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>A drop in GDP over the course of two consecutive quarters indicates a short-term slowdown in commerce and manufacturing thus leading to recession.<\/strong> In order to tame inflation, central banks will tighten their monetary &amp; fiscal policies. This will reduce money circulation and leads to reduced activity in the economy.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-3 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;background-color:#e4fa00;color:#0f0027\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Stock_Market\"><\/span><strong>Stock Market<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>The Stock Market is like a shadow of the Economy. <\/strong>As and when the economy moves, the stock market moves accordingly. And, with inflation running wild, and with everything costing more than it used to, it\u2019ll impact the company&#8217;s Gross &amp; Net profit. And, finally, impacting the stock valuations.<\/p>\n\n\n\n<figure class=\"wp-block-embed aligncenter is-type-wp-embed is-provider-rakshith-pai wp-block-embed-rakshith-pai\"><blockquote class=\"wp-embedded-content\" data-secret=\"pUDxHmrdQs\"><a href=\"https:\/\/rakshithpai.com\/stock-market-basics\/\">Stock Market Basics \ud83c\udfaf<\/a><\/blockquote><iframe class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;Stock Market Basics \ud83c\udfaf&#8221; &#8212; \" src=\"https:\/\/rakshithpai.com\/stock-market-basics\/embed\/#?secret=ceJXsN2FAO#?secret=pUDxHmrdQs\" data-secret=\"pUDxHmrdQs\" width=\"200\" height=\"200\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Real-Estate\"><\/span><strong>Real-Estate<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Landlords have used the real estate for a long time as a way to protect themselves from inflation by raising rents even as the real cost of fixed-rate mortgages goes down. <strong>So, when inflation affects, it affects everyone and mainly those that are renting.<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Debt\"><\/span><strong>Debt<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Bonds are debt instrument that offers interest income to investors. But,<strong> when inflation is high and bond yields are not sufficient enough to wave off the inflationary pressure.<\/strong> Investors are not incentives to invest in bonds and thus, the value of and gets impacted.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Interest_Rates\"><\/span><strong>Interest Rates<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In order to get inflation under control. Interest rates are the first tool used by the country&#8217;s central Banks. So, when at times of high inflation, the central bank will hike the interest rates and vice versa. <strong>Anyone facing a burden with the increased cost of living due to high inflation will face the hardship of increased interest burden on Home loans, Car loans, etc due to raised interest charges.<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-embed aligncenter is-type-wp-embed is-provider-rakshith-pai wp-block-embed-rakshith-pai\"><blockquote class=\"wp-embedded-content\" data-secret=\"OLOoEjvZI4\"><a href=\"https:\/\/rakshithpai.com\/how-do-interest-rates-affect-the-stock-market\/\">How Do Interest Rates Affect the Stock Market?<\/a><\/blockquote><iframe class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;How Do Interest Rates Affect the Stock Market?&#8221; &#8212; \" src=\"https:\/\/rakshithpai.com\/how-do-interest-rates-affect-the-stock-market\/embed\/#?secret=iRNQlb4QHi#?secret=OLOoEjvZI4\" data-secret=\"OLOoEjvZI4\" width=\"200\" height=\"200\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Economy\"><\/span><strong>Economy<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The economy is nothing but the asset management of people living inside a particular region. And, Increased inflationary pressure impacts the economy drastically. Some economists believe that economic growth can be aided by modest levels of inflation. <strong>While high inflation is generally considered a negative, a deflationary economy is one where prices tend to decrease.<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Deflation\"><\/span><strong>Deflation<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>When the price of products and services as a whole drop, we say there is deflation.<\/strong> Deflation occurs when the rate of inflation falls below zero percent. takes time to lose value, but a quick deflation can reverse that trend.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-4 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;background-color:#e4fa00;color:#0f0027\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>As a result of the Russia-Ukraine conflict, uncertainty is at an all-time high. The two countries supply a number of critical items. Supply disruptions in some nations have pushed up prices significantly. There is also an eight-year high in crude oil prices.<\/strong><\/p>\n\n\n\n<p>Global interest rates have been raised in an effort to stem the rising tide of inflation. The balancing task will undoubtedly be difficult. A slowdown in the economy is inevitable if the goal of lowering inflation is to be achieved at any cost.<\/p>\n\n\n\n<p><strong>The stock market has fallen because of inflation. However, there is a general belief that commodity prices have already peaked.<\/strong><\/p>\n\n\n\n<p>The current state of global uncertainties is far from over, so this may not be a cause for rejoicing. Increasing interest rates may lead to a recession.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span><strong>FAQs:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-uagb-faq uagb-faq__outer-wrap uagb-block-cec38644 uagb-faq-icon-row uagb-faq-layout-accordion uagb-faq-expand-first-false uagb-faq-inactive-other-true uagb-faq-equal-height\" data-faqtoggle=\"true\" role=\"tablist\"><div class=\"uagb-faq__wrap uagb-buttons-layout-wrap\">\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-block-529f8c11\"><div class=\"uagb-faq-child__wrapper\"><div class=\"uagb-faq-item\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M416 208H272V64c0-17.67-14.33-32-32-32h-32c-17.67 0-32 14.33-32 32v144H32c-17.67 0-32 14.33-32 32v32c0 17.67 14.33 32 32 32h144v144c0 17.67 14.33 32 32 32h32c17.67 0 32-14.33 32-32V304h144c17.67 0 32-14.33 32-32v-32c0-17.67-14.33-32-32-32z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M416 208H32c-17.67 0-32 14.33-32 32v32c0 17.67 14.33 32 32 32h384c17.67 0 32-14.33 32-32v-32c0-17.67-14.33-32-32-32z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>What Causes Inflation?<\/strong><\/span><\/div><div class=\"uagb-faq-content\"><span><p>As the cost of goods and services in an economy rises, so does the rate of inflation. Increases in production expenses like raw materials and salaries can lead to inflation. Inflation can be caused by an increase in demand for goods and services since consumers are willing to pay more for them.<\/p><\/span><\/div><\/div><\/div><\/div>\n\n\n\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-block-97c73dee\"><div class=\"uagb-faq-child__wrapper\"><div class=\"uagb-faq-item\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M416 208H272V64c0-17.67-14.33-32-32-32h-32c-17.67 0-32 14.33-32 32v144H32c-17.67 0-32 14.33-32 32v32c0 17.67 14.33 32 32 32h144v144c0 17.67 14.33 32 32 32h32c17.67 0 32-14.33 32-32V304h144c17.67 0 32-14.33 32-32v-32c0-17.67-14.33-32-32-32z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M416 208H32c-17.67 0-32 14.33-32 32v32c0 17.67 14.33 32 32 32h384c17.67 0 32-14.33 32-32v-32c0-17.67-14.33-32-32-32z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>What are the Types of Inflation?<\/strong><\/span><\/div><div class=\"uagb-faq-content\"><span><p>It is the rate of currency depreciation and the rise in the cost of goods and services that is referred to as inflation. There are three main types of inflation: Cost-push inflation, demand-pull inflation, and built-in\u00a0inflation are all forms of inflation.<\/p><\/span><\/div><\/div><\/div><\/div>\n<\/div><\/div>\n\n\n\n<div class=\"wp-block-uagb-faq uagb-faq__outer-wrap uagb-block-575cfc85 uagb-faq-icon-row uagb-faq-layout-accordion uagb-faq-expand-first-false uagb-faq-inactive-other-true uagb-faq-equal-height\" data-faqtoggle=\"true\" role=\"tablist\"><div class=\"uagb-faq__wrap uagb-buttons-layout-wrap\">\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-block-0cbac92b\"><div class=\"uagb-faq-child__wrapper\"><div class=\"uagb-faq-item\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M416 208H272V64c0-17.67-14.33-32-32-32h-32c-17.67 0-32 14.33-32 32v144H32c-17.67 0-32 14.33-32 32v32c0 17.67 14.33 32 32 32h144v144c0 17.67 14.33 32 32 32h32c17.67 0 32-14.33 32-32V304h144c17.67 0 32-14.33 32-32v-32c0-17.67-14.33-32-32-32z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M416 208H32c-17.67 0-32 14.33-32 32v32c0 17.67 14.33 32 32 32h384c17.67 0 32-14.33 32-32v-32c0-17.67-14.33-32-32-32z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>Is Inflation Good for the Economy?<\/strong><\/span><\/div><div class=\"uagb-faq-content\"><span><p>Some economists believe that economic growth can be aided by modest levels of inflation. While high inflation is generally considered a negative,<\/p><\/span><\/div><\/div><\/div><\/div>\n\n\n\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-block-8417a88c\"><div class=\"uagb-faq-child__wrapper\"><div class=\"uagb-faq-item\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M416 208H272V64c0-17.67-14.33-32-32-32h-32c-17.67 0-32 14.33-32 32v144H32c-17.67 0-32 14.33-32 32v32c0 17.67 14.33 32 32 32h144v144c0 17.67 14.33 32 32 32h32c17.67 0 32-14.33 32-32V304h144c17.67 0 32-14.33 32-32v-32c0-17.67-14.33-32-32-32z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M416 208H32c-17.67 0-32 14.33-32 32v32c0 17.67 14.33 32 32 32h384c17.67 0 32-14.33 32-32v-32c0-17.67-14.33-32-32-32z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>Who Benefits From Inflation?<\/strong><\/span><\/div><div class=\"uagb-faq-content\"><span><p>When prices rise, the purchasing power of a certain amount of money decreases. So, to summarise, inflation is bad news for people who have a lot of cash saved up and for people whose salaries are set in stone. Those who owe a lot will profit from an increase in prices, making it simpler to repay their loans.<\/p><\/span><\/div><\/div><\/div><\/div>\n<\/div><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Watch_YouTube_Video_For_More_Information\"><\/span><strong>Watch YouTube Video For More Information:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"ast-oembed-container \" style=\"height: 100%;\"><iframe loading=\"lazy\" title=\"What is Inflation and How it affects us? #Inflation\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/YJEmDkcZ1Rk?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<\/div><\/figure>\n\n\n\n<p><strong><strong>Disclaimer: <\/strong><\/strong>All the information on this website is published in good faith and for general information purposes only. <\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-5 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;background-color:#e4fa00;color:#0f0027\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Also_read\"><\/span><strong>Also read:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><a href=\"https:\/\/rakshithpai.com\/factor-investing-types-benefits\/\" target=\"_blank\" rel=\"noreferrer noopener\">Factor Investing &#8211; Benefits, Types &amp; Features Explained:<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/wonderla-holidays-stock-analysis\/\" target=\"_blank\" rel=\"noreferrer noopener\">Wonderla Holidays Ltd &#8211; Is it Worth Investing?<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/saregama-stock-analysis\/\" target=\"_blank\" rel=\"noreferrer noopener\">Saregama Ltd &#8211; Is it Worth Investing?<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/tata-motors-stock-analysis\/\" target=\"_blank\" rel=\"noreferrer noopener\">Tata Motors Ltd &#8211; Is it Worth Investing?<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/burger-king-stock-analysis\/\" target=\"_blank\" rel=\"noreferrer noopener\">Burger King Ltd &#8211; Is it Worth Investing?<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>What is Inflation? Inflation is nothing but \u201ctoo much money following too few goods\u201d. It is an act of inflating the money supply. It is to print more money into circulation. Thus, when few goods &amp; services are produced, the money you hold becomes less in value.&nbsp; All around the world, inflation is taking hold. 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