HOWEVER, THE LAST TIME IT OCCURRED WAS IN 2007. WALKING
INFLATION IS WHEN PRICES GO UP 3-10% ANNUALLY. ANY PERCENTAGE BETWEEN THE GIVEN
NUMBERS COULD DO AS LONG AS IT FORCES PEOPLE TO START STOCK SAVING IN THE
ANTICIPATION OF FURTHER INCREASE IN PRICES.
THIS LEADS TO A HIGH DEMAND IN
STOCK BUT A SHORTAGE IN SUPPLY WHICH INCREASES THE PRICE FURTHER FOR MORE
PROFIT. GALLOPING INFLATION IS WHEN PRICES INCREASE BY 10% OR MORE ANNUALLY.
THIS IS DEVASTATING FOR AN ECONOMY AS IT DRIVES OUT FOREIGN INVESTORS. ONE
REASON FOR IT IS THE FLUCTUATIONS IN THE VALUE OF THE CURRENCY. INFLATION IS
MEASURE ON A CONSUMER PRICE INDEX (CPI). THIS INDEX NOTES THE INCREMENT CR A
DECREMENT OF PRICES OVER A SHORT OR LONG PERIOD OF TIME. CPI DOESN’T MEASURE
EVERYTHING IN THE SAME BRACKET.
FOR EXAMPLE, WHILE THE PRICES OF VEGETABLES OR
FRUITS MAY BE THE SAME OR FACE A SMALL INCREMENT OVER TIME, THE PRICES OF FUEL
REMAIN ERRATIC. THEY SOMETIMES FACE AN INCREMENT OR A DECREMENT DEPENDING ON
THE GEO-POLITICAL SCENARIOS OF THE SAID TIME. UNCONTROLLED INFLATION ALMOST
ALWAYS HAS AN ADVERSE EFFECT ON THE ECONOMY OF A PERONWHO HAS A SALARY OF
RS100,000 COULD GET HIS HOUSE IN ORDER BY SPENDING AROUND RS75,000 ON
NECESSITIES OF LIFE AND STILL SAVE AROUND RS25,000. BUT AS INFLATION HITS THE
MARKET, FOR EXAMPLE, THE PRICE OF PETROL PER LITRE INCREASES, NOW THE PERSON
HAS TO PAY MORE TO GET THE SAID LITRE OF PETROL, BUT THE OTHER BASIC
ACCOMMODATES OF LIFE GET EXPENSIVE AS WELL.
TRANSPORTATION COSTS GET HIGHER
WHICH LEADS TO FOOD GETTING MORE EXPENSIVE BECAUSE IT’S MORE EXPENSIVE NOW TO
TRANSPORT THE VEGETABLES AND THE FRUITS FROM THEIR FARMS TO THE SHOPS AND
STORES. THUS CHAIN OF EVENTS CONTINUES AND BASICALLY CREATES A HUGE BURDEN ON
THE ECONOMY OF A CONSUMER WHO COULD AFFORD TO BE LAVISH BEFORE BUT NOW HAS TO
BE CAREFUL IN ORDER TO SAVE FOR THE VERY
XBOX HE WAS SAVING THAT’S COINCIDENTALLY ALSO HAS GOTTEN A BIT MORE EXPENSIVE.
NOW, THE EVENT MENTIONED ABOVE IS A BIGGIE FOR A CONSUMER BELONGING TO A HIGHER
CLASS BUT INFLATION BECOMES A HUGE HEADACHE TO MIDDLE AND LOWER MIDDLE CLASS
FAMILIES WHO JUST BARELY MAKE DO WITH THE INCOME THEY GET.
SO TO PUT IN GENERAL
TERMS, INFLATION BASICALLY RAISES THE COST OF LIVING. WHAT IT ALSO DOES IS
INCREASE THE POVERTY IN A COUNTRY. NOW THERE ARE MORE CHILDREN WHO GO TO SLEEP
HUNGRY BECAUSE THEIR FATHER WHO WAS BARELY ABLE TO BRING BREAD AND BUTTER HOME
AFTER A DAY’S HARD EARNED PAY COULD NOT AFFORD TO DO SO ANYMORE. IN ONE WAY OR
ANOTHER, INFLATION IS A FACE OF LIFE. IT AFFECTS US ALL, THE CONSUMERS AND
INVESTORS BOTH, AS BOTH ARE EFFECTED BY THE RISING PRICES OF RAW MATERIALS.
EFFECTS OF INFLATION ON DIFFERENT SECTS OF SOCIETY ARE OVEN
BELOW.
DEBTORS AND CREDITORS WITH RISING INFLATION, DEBTORS HAVE A
MAJOR GAIN WHILE CREDITORS FACE LOSE LOSSES. MONEY FACES DEVALUATION DUE TO
RISING INFLATION AND THUS THE DEBTORS EASILY RETURN THE MONEY WHICH IS NOW
HAVING LESS VALUE IN TERMS OF GOOD. THE REASON BEING THAT THE VALUE IS NOW LESS
THAN THE TIME THEY BORROWED IT.
SIMILARLY, DUE TO DEVALUATION OF MONEY, CREDITORS HAVE THE
SAME AMOUNT OF MONEY HAVING LACE FACE VALUE. THIS IS A MAJOR LOSS.
SALARIED PEOPLE
WORKERS SUCH AS TEACHER, CLERKS AND OTHER WHITE COLLAR LOSE
WHEN THERE IS INFLATION. THE REASON FOR IT BEING THAT THE SALARIES ARE SLOW TO
ADJUST TO INFLATION AND THUS THEY FACE TEMPORARY PROBLEMS.
FIXED INCOME PEOPLE
PEOPLE WHO DEPEND UPON PENSIONS, INSURANCES AND RENTS FACE
PROBLEM TOO. THEY GET FIXED AMOUNT OF PENSIONS AND INSURANCES THAT ARE NOT
ADJUSTED FOR INFLATION. THE LOWER INCOME CLASS FACE SAVER PROBLEMS DUE TO THIS.
BUSINESSMEN
BUSINESSMEN OF ALL TYPES GAIN DURING INFLATION, AS PRICES
RISE, THE FACE VALUE OF THEIR INVESTMENT ALSO INCREASES EVEN THOUGH THEY HAD
INVESTED LITTLE THAT WHAT THE CURRENT VALUE ALREADY IS. NOW THE INVESTORS CAN
SELL THEIR PRODUCTS OR BUSINESS ON A PROFIT. ANOTHER REASON FOR PROFIT CAN BE
THAT THE RAW MATERIAL ARE GENERALLY SLOW TO ADJUST THEIR PRICES TO INFLATION.
THIS MEANS THE BUSINESSMEN ARE ABLE TO BUY RAW MATERIALS CHEAPLY AND THUS ARE
ABLE TO SELL OF THEIR GOODS ON PROFITS.
AGRICULTURIST
THERE ARE THREE TYPES OF AGRICULTURIST,
LANDLORDS, PEASANTS AND LANDLESS WORKERS. INFLATION HITS LANDLORD AND LANDLESS
WORKERS EXTREMELY HARD. ONLY THE PEASANTS GAIN A FEW AS THEY ARE ABLE TO SELL
OFF THEIR STUFF FOR BETTER VALUE NOW. THIS IS BECAUSE, FOR THEM, THE COST OF
SELLING IS LESS THAN
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