Inflation or Rising Prices
Outline of Essay
Different definitions of inflation
It has become the problem of every country
Causes of Inflation
Natural calamities and war
How to Curb the Rising Prices
There are certain factors that should be adopted
Government should take action to control the prices
Inflation makes the wealthiest people richer and the masses poorer
In economics, inflation is described as a specific situation whereby the demand for goods and services exceeds the available supply. Inflation can also be defined as an abnormal increase in the quantity of purchasing power.
Inflation is a worldwide problem. Every country faces it. Even it has become a serious problem for the advanced countries. In every country, there is a specific demand and supply within the country.
There is a particular price fixed but sometimes supply increases and demand decreases and at certain time demand increases and supply decreases. In common language, a general rise in prices is called inflation.
It is a burning question nowadays and every country in the world is trying to control it. Generally, inflation means a sudden increase in the circulation of money in a country, or we may say that if goods are less in circulation than the money in circulation, there is inflation in the economy of the country.
The prices of the necessities of life are increasing constantly throughout the world. It has taken an acute form in all the countries of the world, especially in Pakistan. There are many causes of inflation that can be discussed.
Inflation is not only unnecessary for economic growth. As long as it exists, it is the enemy of economic growth
Firstly, natural calamities are the main causes of inflation. If the products of a country are cheapened by floods or famine, etc, its ultimate result is inflation, and there will be an increase in prices.
Secondly, war is another important cause of inflation. The war always causes inflation in the economy of a country. Pakistan was making progress by leaps and bounds before Indo- Pak war 1965.
But after that war, the economy of Pakistan was badly affected and Indo-Pak 1971 brought the worst setback to the people of Pakistan. The government of Pakistan found no other way except to devalue its currency to rebuild the economy.
Thirdly, when people start the use of different things in abundance, the prices of such things rise. It is clear that when production does not increase according to the demand of people, the prices of goods increase.
Fourthly, when there is a shortage of agricultural products like wheat, rice, and vegetables, their prices also rise. When the factories, mills, and industries do not produce the goods of daily use in enough quantity, their prices hike.
Fifthly, when there is a general rise in the standard of living of the people and their income increases, they start living a better life. They start buying luxurious things. In this way, the prices of goods also go up.
Sixthly, we do not have healthy tax policies. These policies discourage producers. The businessmen have a monopoly in the market. They increase prices when they desire.
Finally, where production becomes low due to strikes, lock-up of factories, floods droughts, war, terrorism, etc, the industries do not produce things of daily use in enough quantity. This will give rise to the prices.
Inflation has adverse effects on the commoners. Most people have limited means to buy the goods of life. As a result, some of the people become pick-pockets, thieves, robbers, and dacoits. Even some people commit suicide.
The government servants become corrupt. It promotes social and moral evils. It promotes evil ways of earning. This problem is becoming more painful in Pakistan. We can control and have a check on inflation with healthy measures.
Production is the only answer to inflation
We should increase our production. We should promote our agricultural system. We should increase our exports. Imports should be reduced. The government should decrease its unnecessary expenditures.
We should not import food grains, machines, tools, iron, petrol, chemicals, papers, weapons, etc at very high prices which become the cause of inflation. A peaceful atmosphere and simplicity in a living standard can also prove effective.
Inflation is like sin; every government denounces it and every government practices it