Price Rise/Rise in Prices which happen over a sustained time period is termed as Inflation. In layman’s term, it means that the value of money diminishes, in the sense that the purchasing power of money to buy good and services is significantly reduced.
Though, it is difficult, as per the combined study of economists and academics to pinpoint the root cause of inflation , since there are so many factors at play, the below mentioned factor contribute significantly to price rise :
1. Demand Pull Inflation: Where demand far exceed supply of a product. In economies experiencing rapid growth, this is a fairly common phenomenon. Have you felt that around the time of festivals the cost of essential item, food grains, vegetable and fruits shoot up? That is because of more and more consumption of such products in those seasons,
2. Cost Push Inflation: When a company’s cost of production increases due to any reason such as increased cost of raw materials, or increased cost of labour or increased rate of taxes levied on certain products, the result is felt in the escalated final price.
3. Monetary Inflation: If there is a surplus of money circulating in the market against the same quantity of goods and service, the purchasing power of a single rupee goes down and hence, the value of goods and service becomes more and prices shoot up.
4. Increase in the cost of fuel and Petrol: Even a slight increase in the cost of petrol or diesel is bound to create a massive ripple in the inflation rate. That is because, the fuel cost is added to the raw material cost, the transportation cost and overall the margin becomes wider.
5. External Factors: As the prices of goods and commodities rise in the global market, the same is reflected in the country, as they are imported. Such situations are largely outside the gambit of our national policy makers and difficult to check.
For a common man, inflation is a grave concern. He is constantly forced to make adjustments to his quality of life to keep pace with this disproportionate increase in price. However, with the growth in economy,ruling party justifies that inflation is a natural fallout. Yes, but as long as it is sustained by better growth and increments in salary, commensurate with the rise in prices, which sadly never happens.
Besides, for the people who draw fixed amount, for example pensioners and those who fend off savings in the form of interests from banks, inflation hit deep.
Moreover, recent years have witness an exponential hike in price, which impact adversely the lives of people already at subsistence level, many of whom are forced to commit suicides enmasse, not being able to ensure a decent life for their families.
Uncontrolled or badly managed price rise is detrimental to the well-being of society and hence, in order for a stable economy to function, it is important to have checks and controls in place to ensure proportional price rise.Sweeping reforms are needed to control hoarders from creating false panic in market and reform agriculture to ensure that the prices of essential commodities are least affected by disproportionate price rise.