Inflation is a monster which needs to be reined and we will see that how this monster affects you and me. It is pertinent to note here that if inflation stays high, it eats into the growth of an economy and same has been highlighted in no uncertain terms by RBI.
Lets see how Inflation affects Each one of us
- A high rate of inflation makes any rapid cut in borrowing rates difficult for the Reserve Bank of India. This is because sharp cuts in interest rates could fuel more inflation as money becomes cheap.
- Inflation could also impede consumer demand. At a time when exports are slowing, the Indian economy is more dependent on its domestic demand, any slowdown in which, could impact company bottomlines.
Can We Expect Inflation to Ease in 2013-14?
Well, above is a million dollarquestion as it needs to be seen in the terms of approaching general elections as govt may again go for peple friendly policies in form of subsidies to get poor people on their side and thus it limits the inflation.
Thus we see a higher-than-expected government spending due to general elections in 2014 or a sharp rise in commodity and oil prices could affect to a great extent in controlling the inflation and thus govt has to really crack tough rather than go for appeasing policies if we do not want our country to be again downgraded by international agencies.
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