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Inflation 

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Suppose you had put Rs 100 in the post office scheme or a bank fixed deposit. At an interest rate of 8 per cent or 9 per cent, your savings would have become Rs 108 or Rs 109 in 12 months.

What you could have bought for Rs 100 a year ago will cost you Rs 111.05 now, given the 11.05 per cent rate of inflation. In other words, you would have been better off had you bought the article instead of keeping the money in the post office or the bank.

This is how inflation affects you and me. In India, the inflation has touched high of 15.70 % during Sep 1991, and touched low of 2 % during Nov 1999.

On 01-01-1999, it was 9.3 %  and dropped to 2 % on 01-11-1999. The downward movement of inflation was as fast as the its upward movement nowadays.

Though the inflation was as low as 2 % in Nov 1999, did we purchase the food grains at such a lower price ? At least I don't remember. Actually we are paying more and more year by year. Though the inflation keeps on fluctuating, when it goes up the prices are shoot up immediately and whenever it goes down, prices are never lowered. Does it mean that in name of inflation, they are picking our pockets.

With the inflation figures, wholesale price moves and not the retail price. And in practice once the public is used to purchase something at higher price, price need not be lowered.

Shilpa

ShareTipsOnline.com Team