What is Inflation and how it is calculated?
What is Inflation: Inflation means “a general rise in the prices of goods and services over a time period which results in the loss of currency purchasing power.” It is observed that when the general price level rises due to rise in inflation, we are forced to buy fewer goods and services as we were buying earlier. We can explain them by quoting an example here. If we were buying one liter of Milk for Rs. 10-12 in 1995 then the same Milk we are buying at Rs. 40-45 in 2015. Thus, we can say inflation results in loss of value of money purchasing power. Continue reading