WHILE WRITING KEEP 4 W’s and 1 H IN YOUR MIND

WHAT WHEREWHO

WHICHHOW

An increase in the price you pay for goods.

OR

Price Inflation is when prices get higher or it takes more money to buy the same item.

•INCREASE IN PRICES OF DAILY USE COMMODITIES

•CUSTOM DUTIES ON IMPORTS ARE REDUCED

•CUSTOM DUTIES ON EXPORTS ARE INCREASED

According to economists current inflation rate is

8.98% recorded on 1stDecember, 08.

EFFECT ON SHARE MARKET…

•June 27:- India’s inflation rate jumped to 11.42 per cent in mid-June, its highest in more than 13 years, and analysts said the central bank could follow up two rate increases this month with more policy tightening as prices climb.

• The wholesale price index rose 11.42 per cent in the 12 months to June 14, up from 11.05 per cent a week earlier to its highest since annual numbers in the current series became available in April 1995.

An increase in the general level of prices implies a decrease in the purchasing power of the currency.

Uncertainty about future inflation may discourage investment and saving of the people in stock market.

•Rise in prices of food items

for example :- fruits,vegetables

•Rise in fuels for example LPG

Petrol

• Availability of loans at high rate of interest.

•Risk in investments

RISK IN INVESTMENT IN STOCK MARKET

DIRECT AND INDIRECT TAXATION DECRESE IN PURCHASING POWER OF COMMON PEOPLE

4

Steps Taken By The Government

INFLATION CAN’NOT BE AVOIDED BUT ITS EFFECT CAN BE LOWEREDBY FOLLOWING WAYS:-

PAYMENT OF TAXES

BY PURCHASING INDIAN GOODS

BY AVOIDING LARGE INVESTMENT IN SHARE

MARKET