Two ways of looking at inflation
Inflation in economic terms is the percentage bywhich demand is higher than the supply. Forexample, if the inflation rate is 5% for aparticular item, it means that the demand is 5%more than the total supply of that particularitem.
Inflation can also be defined as an increase inthe general level of price of goods and servicesover a period of time. It is measured as anannual percentage increase and is a majorconcern for common people. It negativelyaffects the purchasing power of money as youcan buy less of goods and services with sameamount of money.
18th October 2011
3EFM Faculty P.Uday Shankar