Definition: A rise in the general level of price in an economy. That is sustained over time. The opposite of Inflation in ‘deflation’.Inflation, in general, is just a price rise.When the general level of prices is falling over a period of time it is called deflation.The rate of inflation is measured on the basis of price indices which are of two kind WPI & CPIWPI - Wholesale Price IndexCPI - Consumer price Index Rate of inflation (Year x) In the index, the total weight is taken as 100 at particular year of the past i.e. Base year (Year of reference)Inflation is measured ‘point to point’. It means that the reference dates for the annual inflation are January to January of two consecutive years. This is similar for even weekly inflation. Types of Inflation: Broadly there are 2 types of inflation. (a) Demand - Pull Inflation: A mismatch between demand & supply pulls up the price.Either demand increases over the same level of supply or the supply decreases the same level of
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