Sunday, 12 February 2012

Inflation


Inflation

The word inflation has been derived from the word “inflate” which means to rise artificially. In economics, it is a phenomenon where by general price level rises persistently. In simple words, inflation means a rise in prices is by increasing the amount of paper money in circulation.

Definitions of Inflation:
To Coulborns, “It is a case of too much money chasing too few things.” and according to Brooman, “Inflation is a continuing increase in the general price level.”

Generally, five factors are held responsible for the inflation; they are money supply, spending, natural calamities, speculative measures and wages.

Inflation is a decline in the real value of money. 
Today, in Pakistan we can say that it is money supply (increase in money supply is accompanied by balanced increase in the output of goods and services), which has caused inflation. Whatever it is and whatever it was a matter of high politics to keep the ratio of inflation higher and higher in Pakistan, so that the sufferer may have to bear the burden and that is the middle and poor class of this sovereign country. Since its beginning, we have been hearing the worst dialogues from the sweet and sour lips of our democrats and dictators that Pakistan is suffering (economically) from difficult time. Each time it is shown that the value of rupee is decreasing due to corruption and wrong policies.

“The higher inflationary trend in Pakistan over the last two years has been the outcome of pressure that emanated from demand and supply sides.”

Salaried people are the most sufferers as the prices of commodities increase whereas the income remains the same. On the other hand, increase in the prices of commodities is a favourable factor for the businesspersons to a little extent. This remains a tug a war between rich (politicians, industrialists, bureaucrats etc) and the poor.

“The major rise in the prices is because of the increasing prices of oil (as increased prices of oil increase the cost of production), but no such steps have been taken to control the oil prices, or at least lessen the effect.”


The irony of the fate is that in the “land of the Paks” the rich becomes richer and poor becomes poorer. The poor class is shown only the glimpse of subsidy game – the statistical game that the poor consciously and unconsciously is unable to understand.

“Selling basic food items at Utility Stores Corporation is not an achievement. Did this step have the effective distribution of goods? No, privileged group has taken the major part of goods from these Utility Stores Corporations, and the poor couldn’t have access over these basic goods even then.”

Thus, inflation these days is rocketing high in shape of all commodities, such as oil, flour, etc. It does not require a rocket science to understand that the burden of these sky-high prices is going to break the spinal column of the poor and middle class of Pakistan.  Inflation is one of the obstacles on the way of development. In Pakistan, it has squeezed the major part of the population. It needs to be controlled by strategic planning. Domestic production should be encouraged instead of imports; investment should be given preference in consumer goods instead of luxuries, Agriculture sector should be given subsidies, foreign investment should be attracted, and developed countries should be requested for financial and managerial assistance. And lastly a strong monitoring system should be established on different levels in order to have a sound evaluation of the process at every stage.




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