Inflation: The Increase In Prices In The Economy

Inflation: the increase in prices in the economy

Introduction

 Why is it important to reduce inflation?, To cover this issue and give a clear answer to our issues and dilemmas, the concept given to this term must be known. According to the SAR, inflation is a generalized and continuous increase in the general level of prices of the economy’s goods and services. Inflation is usually calculated as the percentage variation of the consumer price index (CPI). This economic phenomenon generates a sequence of negative effects on a certain population, but above all to the main economic agents (workers, savers, farmers, among others).

Developing

Which causes them to greatly decrease their production, affecting their entire society. Of course, this problem is not only typical of third world or development countries, it also affects the main world powers, not largely, but the increase in its inflation is noted. Now, you should know why inflation occurs and why it should be controlled. At present, indicators are being handled to measure inflation in different countries: the CPI, which is a statistical average that indicates the evolution of the assets of goods and services consumed by the population residing in a country;and the Harmonized Price Index (IPCA) of the European Union, which has been prepared since 1997. 

Inflation means that the nominal (default) values of all types of goods increase and that the currency is devalued. This is the result of the lack of production by certain economic agents, the shortage of raw materials that function as the basis of the entire economy of a country, devastating natural phenomena that force producers to abandon their workplaces to enterUrban areas (generates production shortage), the lack of demand by the consuming population, which brings with it a negative effect for its population, since there is no amount of balanced demand to supply, the goods that canPerish in the short term will be lost, thus generating a great loss to producers.

Controlling inflation is a challenge for each nation. This helps its production be effective and that its degree of economic maturity is greater. In order to control it, countries could begin to reduce the overproduction and unemployment rates of their society, since sufficient resources would have to face a short or medium -term shortage. More people with stable employment, it means that their production is effective and their poverty rates could decrease. The government should have among its planning plan rules, norms such as agricultural subsidies, social protection, among others that benefit primary producers, since these are the basis of a stable economy. The most vulnerable communities should be reversed in education. 

conclusion

Technology must be a fundamental factor in the development of a country, so that its economy is not based above all on the overexploitation of natural resources, as the majority of developed countries in third world countries do. A community must reduce its corruption rates, so that its resources are distributed in a better way. Decrease the unnecessary expenses made by the Government (fiscal deficit), would help reduce inflation in a pleasant and safe way, with medium -term benefits. Inflation is a continuous, sustained and more or less increase of the general price level. A nation should not be allowed to increase its inflationary indices, or that its economy is reduced or controlled by industrialized countries.