What Causes Inflation
Inflation refers for the undesired increment in the standard price of products and goods. It is a representation of unnecessary price rise over a particular time period. This problem consequently results in down marketing. It inversely influences the commerce and trade world. It causes fall in the purchase of that particular product and gives rise to weak economy day by day.
Generally, people feel it comfortable to pay for a product according to the quality and quantity of that good. Sometimes the price of any product becomes higher than the normal price suddenly may be due to hike in raw material price or any other reason, which ends up in increase in production cost. This brings up the condition of less selling of that product. As a result, the product gets less economic response and brings down significant financial loss for traders. Similarly, the people faces problem due to a less availability of the good. Often, a common person cannot afford to pay an unreasonable amount of money for a simple domestic utility.
The problem of inflation interferes with the routine budget and economy of the people adversely. Although, this condition arises temporarily, still it affects the life of common people severely. This matter creates more fierry situation if inflation is affecting the price of any domestic good of daily need. For instance, if the price of cereals, eatables, petrol, cooking gas etc. is subjected to inflation, the citizens become much aggressive towards the Government control the price rise.
The occurrence of inflation brings around much grieve among the citizens for the ruling Government. People commit public meetings, rallies, strikes and movement etc. to show their unsatisfaction and opposition for the Government. It causes disturbance in the normal life style of people. Many middle class people undergo the condition of starvation for the product which is subjected to inflation. They become helpless to bear deficiency of the thing as they cannot arrange it in such a high price. Inflation in any domestic utility of daily need becomes a cause of shortcoming for citizens. Unwanted raised price of vegetables, fruits, milk and cooking gas is the mostly discussed matter among housewives.
In national and international market also, inflation is a bad news for traders, merchants and producers. Directly, it seems to bring profit for a seller to sell a good in more amount of money than the reasonable cost. But, indirectly, it is a matter of loss because inflation gives rise to less selling of the good. In this way, world trade and share market also suffers undesired and adverse conditions in business. Inflation affects the business of export and import significant manner. Suppose an item is being exported from a country to the other nation in as a profitable deal. It is an important part of rich economy of the country which is exporting out the product. Unfortunately, the country importing the item faces inflation in the price of that item; subsequently the demand of the item gets down. Low demand will inhibit the export business of the particular country. Hence, inflation in the price of a product can seriously influence the economy of both those country.