Tag Archives: Inflation

Paper on ‘Inflation Adjustment’

I am very happy to share with everyone, the paper which won me the ‘Best Paper Presenter’ award at the Nation Convention of CA Students held at Kolkata. Click to view the power point presentation on Inflation Adjustment.

INTRODUCTION:

Inflation adjustment has gained increased importance considering the fact that India is registering double digit inflation. In economics, inflation is considered to be a rise in the general level of prices of goods and services in an economy over a period of time. Inflation and the monetary unit or currency of a particular country or region is just inseparable. Inflation in other terms may be considered as the depreciation in the purchasing power of any given currency. As inflation increases, money buys less and less goods and services.

MEASURE OF INFLATION:

Inflation is usually estimated using the Inflation rate. Inflation rate is usually calculated as the percentage change in a Price Index year on year. Usually Consumer Price Index is considered the ideal price index for calculating inflation rate. But in India Wholesale Price Index or WPI released by the Reserve Bank of India is considered for calculating the Inflation rate of the Indian National Rupee. For instance, in January 2007, the U.S. Consumer Price Index was 202.416, and in January 2008 it was 211.080. The formula for calculating the annual percentage rate inflation in the CPI over the course of 2007 is

(211.080-202.416) X 100 = 4.28%

202.416

From this it is very clear that Inflation measures how costly goods and services have become over a period of time.

IS INFLATION HARMFUL?

There is a general perception that any inflation is really harmful to the economy and the consumers. But inflation though is a measure of price rise is not always harmful. Continue reading Paper on ‘Inflation Adjustment’