[Type text]

Inflation, rate hikes, falling markets : what now

It may be one of the familiar words in economics. Inflation has
plunged the world economics and made it vulnerable, In India official
data revealed that retail inflation had grown by 7.8%, the Sensex at B.S.E
(Bombay Stock Exchange)fell by 1,158 points in April.In short the general
price level Indian consumers faced was almost 8% higher than it was last
year. In the same period, the Dow Jones Industrial in the United States
too has lost 7% since the Federal Reserve hiked interest rates by 50 basis
points on May 4, also The Hang seng in Hong Kong, the Nikkei in Japan
and Dax in Germany Lost too.

There are so Many concerns about the ongoing inflation. The war
happening against Ukraine and Russia and the higher prices of crude oil
are related and they are major contributor to the inflation. As the
pandemic hits in 2020-21 the economy fluctuates and the food prices
rose by large factor (7.3%). The Food items, Fuel and Light and core
sectors are estimated to experience an inflation rate of 6% or more. The
market sentiments are unfavorable in this state amid suspicions that the
RBI could go for some rate hikes to make inflations under control.

In the short term, inflation creates winners and losers, but in the
eventual analysis everyone suffers if it stays persistently high. Some of
the likely impacts of inflations,

1] It reduces peoples purchasing power. The general price level is 25%

higher than it was at the beginning of 2019.even in standard times, this
would have restricted people’s ability to purchase things, those with job
looses and with reduced incomes would struggle increasingly. The poor

(1) P.T.O
[Type text]

are the most collapsed due to the little buffer to sustain through long
periods of high inflation.

(1) P.T.O