Inflation a word which is often heard while watching TV; but many of us don’t exactly about it. Have you ever contemplated how can it affect your pocket/budget? What is an inflation Rate in India currently? How can it be calculated? Here, we come with this blog to add more information to you. Let’s have a look
In a nutshell, Inflation is a term which indicates a sustained increase in the general level of Price for Goods and Service. For Example, If we look 15 years back and find the price of 1 litre Milk; it was about INR 6 per litre which has increased in 2015 INR 30 per litre. It’s called Inflation, which stands for the level of the price of the good and the Service. Like Milk, there are many things for which we are paying a huge amount such as vehicle, petrol, dairy product, vegetables, fruits etc.
Now the next important thing to understand what the causes led inflation? Demand-Supply play a major role to decrease the value of money and increased the value of goods. For example, nowadays Onion is quite costly INR 60 for 1 Kg which was INR 25-30 for 1 Kg about 2 weeks ago. And People are paying for it even they have to pay extra. The price of onion will remain same till the Demand and Supply don’t match each other. Apart from it, there are many reasons that raise the value of goods and services like the increased cost of production, Unemployment etc.
How to calculate inflation rate in India
To calculate inflation rate, there are two ways CPI Consumer Price Index and WPI Wholesale Price Index. In India, WPI (Wholesale Price Index) is used to calculate inflation rate. There are about 430 items comes under WPI such as Services, Textile, Agriculture Product, Manufacturing etc., To calculate, put the current price and earlier price of the same product coming under WPI and subtract it and then multiply 100.
Inflation affects the life of common man badly. In last 10-15 year Education inflation has increased 12-13% in India that does not allow everyone to afford the best education for their children. Inflation brings down the value of your investment.