Inflation and What Not
by All these years we have only heard of high value inflation figure. Sometimes it does come down and oscillates between two figures. Recently in India, the figure has gone far down. We have a negative inflation figure in India as of now. Do you understand what it means to a common man?
Honestly I don’t understand a thing about the term ‘Inflation’. Whatever knowledge I have gathered gets melted away when I co-relate it to the actual happenings. For instance, one eminent professor said that what it means for a common man is, that the price increase would be limited to the inflation figure. He further elaborated: if the inflation rate is 5, the price rise will be only 5 percent. Armed with this super knowledge I told all my friends, “Look fellows, the price of tomatoes today is Rs. 12. It could rise to a value of Rs. 12.72 in tune with an inflation figure of 5%. Okay? But the darned thing shot up by 50% to Rupees 18. I hid my face.
It’s true that the traders don’t abide by the inflation rule at all. They put up the price of all commodities as they like throwing our home budget out of gear.
Then our politicians bragged that the Indian inflation rate was showing a downward trend: 15, then 13….. 9, 8,….. 5, 4, 3, 2 , 1. Aha! We have reached the starting point. “Imagine 1% inflation. Great. This hasn’t happened in the last 50 years?” boasted our politicians including the Finance minister. We passed on the information to all the countries in the world. They surely must have appreciated India’s efforts at controlling the famous figure. In the meantime, prices continued to shoot up as if it was some kind of a parallel line which has nothing to do with the inflation line. Then came ‘Recession’. Prices shot up and we were told that it would since recession was a global phenomenon. But the inflation figure took a dive to a value of 1%. The news announcement said that it would be going further down, further and further down below the graphic line and currently it is ‘minus 1.16’. Once again I have no idea what this marvellous negative figure means but the prices have their own formula.
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