What is inflation,how it increase/decrease?

what is the meaning of inflation rate 6%, how it calculate,how inflation rate can be increase/decrease. what factor depends on inflation

What is inflation,how it increase/decrease?

Inflation is a measure of cost of goods/services. In short if there is plenty of demand but less supply, the costs go up and so does inflation. Also, if demand cools, then the costs come down and so does the inflation.

What is inflation,how it increase/decrease?

Inflation is generally measured by a basket of goods that is generally used by the public (mostly it is the basket of consumer goods). Each goods has its share in the basket and the weighted average price of those goods is the Consumer Price Index (the weighted average price of consumer goods). The change in this index is the inflation. So 6% inflation means that the Consumer Price Index in terms of base period has increased by 6%, in other words, the weighted average price of consumer goods has increased by 6%.

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What is inflation,how it increase/decrease?

In economics, the inflation rate is the rate of increase of the average price level (a measure of inflation), usually some form of consumer price index. Alternatively, the inflation rate is the rate of decrease in the purchasing power of money. This is sometimes expressed as an %26quot;annualized%26quot; number, even if the period measured is less than a year.

The rate of inflation is a variable used to calculate the real interest rate, as well as real increases in wages. In general inflation rates are calculated so that they can be directly subtracted from some other rate. In general an inflation rate will be stated in seasonally adjusted terms.

If P0 is the current average price level and P 閳?1 is the price level a year ago, the rate of inflation during the year might be measured as follows:

Inflation rate=((Po - P-1)/P-1) x 100%

There are other ways of calculating the inflation rate, such as logP0 閳?logP 閳?1 (using the natural log), again stated as a percentage.

There are two general methods for calculating inflation rates - one is to use a base period, the other is to use %26quot;chained%26quot; measurements. Chained measurements adjust not only the prices, but the contents of the market basket involved, with each price period. More common, however, is the base period reference. This can be seen from inflation reports from the %26quot;relative weight%26quot; assigned to each component, and by looking at the technical notes to see what each item in an inflation basket represents and how it is calculated.