In simple terms inflation is the rise in price of commodities and low purchases.

Causes and effects

• Inflation is caused when there is too much demand is more for goods or too much money in circulation.
• Inflation affects the entire economy of the nation.
• A drop in exchange rate, increase in tax or wages can lead to inflation.
• An increase in the quantity of money supply can cause inflation.

Controlling inflation

• Depending on what caused inflation, policies should be implemented. For instance if the cause was excessive demand for commodities, it should be reduced.
• Production costs can be reduced.
• Banks can increase interest rates to avoid circulation of money in excess.
• Trying to maintain a stable and fixed currency rate.
• The supply of gold to the amount sold or output should be stable.
• The percentage of inflation can be measured using the consumer price index. It is a measure for price change based on production of goods.

Inflations is on the rise and government should try to curb the effect of it, by bringing economic policies and natural reforms. Government can find out the actual cause of excessive demand of goods and services and try to take some measures to reduce it. Government should check the cost of production to be able to solve the inflation problem. Government should also try lowering the borrowing amount at their level. Government can increase the taxes, to reduce the disposable income.

Inflation is the rise in prices of goods and services. There can be many effects of inflation from decrement of the real value of money to the increasing demand of goods. Inflation can be controlled by increasing the interest rates in banks, increasing the taxes and reducing the expenditure of government. Government should bring out a planned policy to reduce the effect of inflation in the country. Government can also restrict the increase in incomes and prices. Inflation has to be controlled and government has to take assertive measures to control it.