Guide on “What Is Inflation” & the Common Causes Behind High Rates
WHAT IS INFLATION – Here is the answer to that and its causes as well as the ways on how it can be controlled by a government.
One of the things monitored by every country and as well as its people is the inflation rate. However, truth be told that not everyone knows the definition of this rate which governments release an update about from time to time.
In the Philippines, the government release data about it on a monthly basis. It is the Philippine Statistics Authority or more commonly called “PSA” which monitors and announces the rate per month. It also issues explanation behind a drop or a rise in the rate.
What is inflation?
According to Investopedia, this term refers to the rise in the costs or prices of goods and services in a certain country. It shows the decline in the purchasing power and is the opposite of deflation which happens when prices of goods and services drop and the purchasing power of the public rises.
When the inflation is high, it means that prices of goods and services have increased rapidly. This situation can be viewed differently by people. The investors or those who have tangible assets like stocked commodities and properties may like a high rate as it raises the value of their assets.
The measurement of inflation includes foods products and as well as commodities like metal, fuel, services like health care, and utilities like transportation and electricity. It has a goal of measuring the overall impact of the changes in the costs of products and services.
What are the causes of inflation and how it can be controlled?
The usuall cause of inflation is the supply of money in a nation. This can happen when monetary authorities print and release a lot of money to the people. Based on the article, such move may reduce the value of the currency. It can also be caused by a negative supply of key commodities in the country. Addressing these situations may help control inflation in the country.
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