inflation essay in tagalog

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Ano ang Inflation? (Basics ng Economics at Investing)

March 20, 2019 by Ray L. Leave a Comment

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Noong 2018 nabalita sa news ang napakataas na inflation rate , pero noong binasa ko ang mga comments sa news articles, parang marami ang hindi nakakaintindi sa inflation at kung paano ito gumagana. Halimbawa, pinupiri ng ibang tao ang pagtaas ng inflation rate dahil akala nila mabuti ito, at parang hindi rin nila naiintindihan kung gaano kalala ang sitwasyon dahil sinasabi nila na mataas rin daw naman inflation sa ibang bansa.

Akala rin ng iba, ang inflation sa Pilipinas ay tumaas dahil dumami daw ang nagkatrabaho at ang pagdami ng mga sumasahod ay nagdulot ng pagbaba ng halaga ng peso, pero hindi naman ito totoo (ito ay “cost-push” dahil sa bagong tax law at sa nilalaman din nitong excise tax sa fuel).

Ano ang inflation ? Talakayin natin ang basics ngayon, kaya ipagpatuloy mo lang ang pagbabasa!

Ano ang inflation?

Kung hindi mo napansin, mas mura ang lahat ng bagay sa nakaraang sampu hanggang dalawampung taon. Halimbawa, ang isang daang piso ay makakabili ng napakaraming bagay noon, pero ngayon halos sapat lang ito para makabili ng isang hapunan. Ito ang inflation.

Ang inflation, ayon sa diksyonaryo , ay ang patuloy na pagtaas ng pangkalahatang presyo ng mga bagay na madalas naiuugnay sa pagdami ng pera at credit o utang base sa pangkasalukuyang dami ng goods (mga bagay o kagamitan) and services (serbisyo o trabaho) sa isang ekonomiya o market. Ayon din sa Investopedia , ito ang pagsukat sa pagtaas ng presyo ng mga piling goods and services sa isang ekonomiya sa loob ng isang nakatakdang panahon. Kasama rin dito ang pagbaba ng purchasing power (dami ng kayang bilihin) ng isang currency o salapi ng isang bayan.

Sa madaling salita, ang inflation ay tungkol sa kung paano tumataas ang presyo ng mga bagay sa pagdaan ng panahon, at ang numero o porsyento na ginagamit para ilarawan ito ay ang tinatawag na inflation rate.

Sanhi ng Inflation:

Ang inflation ay pwedeng uriin ayon sa sanhi nito. Ang dalawang pangunahing klase ay demand-pull at cost-push , tapos may isa pa na tinatawag na built-in.

Demand-Pull Inflation – Nakita mo na ba kung paano ang presyo ng isang laruan o ng pagkain ay tumataas kapag nagiging mas popular ito? Isipin mo kung mangyari iyon sa lahat ng bagay sa isang market at maiisip mo kung paano gumagana ang demand-pull inflation. Maraming dahilan kung bakit pwede itong mangyari, tulad ng kung naeenganyo ang mga tao na gumastos ng pera (kaya nagtataasan ang mga presyo), tumaas ang paggastos ng gubyerno, dumami ang supply ng pera, o iba pa.

Cost-Push Inflation – Isipin mo kung ikaw ay isang manufacturer ng bakal na kagamitan tapos dumoble ang presyo ng bakal. Para manatiling profitable (kumikita ang iyong negosyo), kailangan mong taasan ang presyo mo dahil mas mahal nang magpagawa nito. Bukod pa roon, ang mga manufacturers ng kotse, building contractors, electronics, at halos lahat din ng mga gumagamit ng bakal ay mapipilitan ding magtaas ng presyo. Ganoon gumagana ang cost-push inflation.

Side note : Naramdaman ng Pilipinas itong cost-push inflation noong nagkaroon ng bagong tax law (TRAIN) na may kasamang excise tax on fuel . Dahil nagmahal ang langis o gasolina, ang lahat ng nangangailangan nito tulad ng transportasyon (halos lahat kailangan magcommute at magdeliver ng mga produkto), plastics manufacturers (ang paggawa ng plastik ay gumagamit ng oil), pagkain (na nagangailangan ng transportasyon mula sa mga sakahan at probinsya), at napakarami pang iba ay kinailangang magtaas ng presyo para kumita.

Built-In inflation – Kapag tumataas ang presyo ng mga necessities tulad ng pagkain, tubig, kuryente, at iba pa dahil sa inflation, mangangailangan ng mas mataas na sweldo ang mga tao para mabuhay. Mas mura nga naman ang mga bilihin dati, at mas mababa din ang sahod noon. Lagi namang may inflation sa pagdaan ng panahon, at kahit tumaas ang mga presyo, tumaas din naman ang sweldo ng mga trabahador dahil dito. Noon nga namang 2007, ang minimum wage sa NCR ay nasa P325-P365 , pero sa 2018 ito ay naging halos P512 na .

Ilang punto tungkol sa inflation:

• Ang inflation, sa mababa o desenteng lebel, ay normal lang at nakabubuti ito. Ito’y nagdudulot ng pagtaas ng wages o sahod, patuloy ang pagdaloy ng pera sa ekonomiya, at para sa mga taong bumibili ng assets gamit mortgage o mga may matatagal na utang, ito ay “nagpapababa” ng utang . Ang inflation sa 2% hanggang 3% ay itinuturing maayos na lebel.
• Ang biglaang pagtaas ng inflation ay napakasama sa mga mamamayan. Nagmamahal ang mga bilihin kumpara sa sinasahod, nawawalang halaga ang savings o ipon, at “naghihirap” ang mga tao.
• Kung ang inflation rate ay hindi na makontrol at naaapektohan na nito ang ekonomiya, ang gubyerno o central bank ay papasok at gagamit ng monetary policies para kontrolin ito.
• Ang presyo o halaga nga rin pala ng mga stocks, real estate, at ilan pang investments ay tumataas din dahil sa inflation.

Ilang maling idea tungkol sa inflation:

Nakita ko sa mga comments sections na akala ng ibang tao mabuti ang biglaang pagtaas ng inflation rate. Hindi. Masama ito. Kung ikaw ay ordinaryong trabahador na may ordinaryong sahod, napakasama ng sobrang taas na inflation rate. Ito ay sinyales ng kakaiba at biglaang pagtaas ng presyo, at mas kakaunti ang mabibili mo sa pera mo. Kung dati nakakabili ka ng isang plastik na puno ng pagkain at groceries, ngayon mas kakaunti pa dito ang mabibili mo sa kaparehong halaga. Ikaw ay “mas mahirap” na dahil sa mataas na inflation , at mananatili ka sa sitwasyong iyon kung hindi tataas ang sahod mo.

Ang isa pang pagkakamaling nakita ko sa social media ay ang dapat ipagdiwang ang kaunting pagbaba ng inflationr ate. Hindi. Masyado pang maaga para magdiwang. Ang pagbaba ng inflation rate ay hindi palatandaan ng pagbaba ng presyo. Ang ibig sabihin nito, mas bumagal lang ang pagtaas ng presyo ng mga bilihin.

Isipin mo ang isang bag ng groceries na nagkakahalaga ng P1,000. Sa 6% inflation rate, ito’y magiging P1,060 ngayon. Kung sa pagdaan ng panahon bumaba sa 4% ang inflation rate, hindi nito ibig sabihin na P1,040 na lang kailangan mong ibayad. Kailangan mong magbayad ng 4% NA DAGDAG sa 6% dati. Kailangan mo nang magbayad ng P1,102.40 ngayon.

Deflation – Ito ay kabaligtaran ng inflation at nangyayari ito kung bumaba nga ang presyo ng mga bilihin. Kung may deflation, makakakita ka ng negatibong numero sa inflation rate.

Inflation at Investing

Isang huling payo tungkol sa inflation. Kapag sinimulan mo nang pag-aralan ang investing, kailangan siguraduhin mo na mas mataas ang kita ng portfolio mo kumpara sa inflation rate, lalo na kapag gusto mong lumaki ang pera mo sa pagdaan ng panahon. Buti na lang ang halaga ng ilang investments tulad ng stocks, mutual funds, real estate, gold, at iba pang assets ay lumalaki rin kasama ng inflation. Mag-iiba rin naman ang resulta mo, lalo na kapag hindi ka nagresearch at hindi mo alam na inilagay mo pala ang pera mo sa masasamang investments.

Bukod pa roon, ang ilang assets at investments na may mabababang yield o kita ay NALULUGI at bumababa ang halaga dahil sa inflation . Kahit maayos naman ang performance ng bonds (pwede mong tignan ang datos dito) hindi pa rin maganda ang kita nito tulad ng savings accounts, time deposits, money market funds, cash, atbp. Ang mga iyon ay pwedeng malugi dahil sa inflation sa pagdaan ng panahon. Tumataas ang numero, pero ang purchasing power o dami ng mabibili nito ay bumababa.

Isipin mo ito. Ang P1,000 ay napakalaking halaga noong 1980s at napakarami mong mabibili sa ganoong halaga noon. Sa kasamaang palad, kapag nag-invest ka sa savings account na 0.1% lang ang interes kada taon, ito’y magiging halos P1,040 lang sa taong 2020. Lumaki nga ang numero, pero wala kang masyadong mabibili sa perang iyon ngayon no?

Gayunpaman, kung gusto mong talunin ang inflation at kumita mula sa iyong investments, ang pinakamabuting pwede mong gawin ay maglagay ng pera sa mga assets tulad ng index funds at blue-chip companies (pwede rin sa real estate kung magaling ka) . Kahit mas-volatile sila at mas maraming risk kumpara sa mga “mas-safe” na fixed-income investments (bonds, treasury bills, atbp.), mas mataas ang pagkakataon nilang talunin ang inflation at ikaw ay payamanin ka kaysa pahirapan.

Ang mga low-yield (mababang kita) na investments na hindi mas mataas ang kita kumpara sa inflation ay SIGURADONG TALO.

Mag-iiba pa rin naman ang resultang makakamit mo ayon sa gagawin mo at paglalagyan mo ng pera, kaya ang pinakamainam na pwede mong gawin ngayon ay magbasa, mag-aral, at malamang tataas ang pwede mong kitain. Read more, learn more, and eventually earn more.

About Ray L.

Ray is the main writer behind YourWealthyMind.com. He is a proponent of self-improvement and self-education, and he believes that anyone can achieve their goals once they learn the knowledge and skills they need to attain them. He considers it his mission to enrich lives and end poverty by teaching people lessons they may need to succeed.

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Ano ang Implasyon? : Kahulugan, Sanhi at Epekto

Ang implasyon ay madalas na tumutukoy sa pagtaas ng presyo ng mga produkto at serbisyo na madalas na ginagamit, tulad ng pagkain, renta, langis, damit at iba pa.

Ano ang Kahulugan ng Implasyon?

Ang implasyon ay pangkalahatang pagtaas ng mga presyo sa loob ng isang ekonomiya sa isang takdang panahon. Ito din ay  tumutukoy sa pagbaba ng purchase power (ang kakayahan ng salapi na bumili ng serbesyo at produkto) ng isang unit ng salapi. Halimbawa, Kung dumoble ang presyo ng bilihin, ang purchasing power ay bababa ng kalahati; Kung bababa ng kalahati ang presyo ng bilihin, dumudoble ang purchasing power.

Ang deplasyon naman ang kabaliktaran nito kung saan tumataas ang halaga ng purchasing power habang bumababa ang mga presyo ng mga bilihin.

Saan aabot ang 20 pesos mo? Filipino Ice cream Commercial

Ano ang mga Sanhi ng Implasyon?

Ang isa sa tinuturong sanhi ng implasyon ay ang pagtaas ng suplay ng salapi na nasa sirkolasyon ng isang ekonomiya. Ang pagtaas ng money supply ay maaaring dulot ng pag-iimprenta ng maraming salapi ng mga awtoridad at pamamahagi nito sa mga tao.

Maaaring bumaba ang halaga ng isang salapi sa pamamagitan ng pagpapautang ng pera ng mga banko at sa pamamagitan ng mga government bonds na ibinebenta ng gobyerno. Alin man sa sitwasyon na binanggit, tataas ang money supply , kasabay nito ay ang pagbaba ng purchasing power ng salapi.

Ang ilang uri ng mga sanhi na ito maikakategorya sa sumusunod: Demand-Pull inflation, Cost-Push inflation at Built-in inflation

Demand-Pull Inflation

Ito ay nagaganap dahil sa mabilis na pagtaas ng demand dulot ng labis na paggastos ng mga pribadong indibdwal at ng gobyreno habang hindi tumataas ang bilang ng supply. Ito ay nagdudulot ng paglaki ng ekonomiya ng isang bansa sa isang maikling panahon. Habang tumataas ang demand sa mga produkto at serbisyo, tumataas din ang presyo ng mga produkto at serbisyo.

Kapag maraming pera ang maaaring gastusin ng isang tao, ito ay nagdudulot sa mas mataas na paggastos ng mga consumer, at ang demand na ito naman ay nagdudulot ng pagtaas ng mga presyo. Ito ay lumilikha ng demand-supply gap na may mataas na demand at hindi flexible na supply, na nagdudulot ng pagtaas ng presyo.

Cost-Push inflation

Ang cost-push inflation ay dulot ng biglaang pagbaba ng mga supply (potensyal na output). Ito ay maaring dulot ng mga sakuna, o ang pagtaas din ng mga presyo ng input (tulad ng mga hilaw na materyales).  Isang halibawa nito ay ang patuloy na pagbaba ng supply ng krudong langis, ito ay nagdudulot sa patuloy na pagtaas ng mga produktong nagmumula sa langis.

Built-In inflation

Dulot ng adaptive expectation, ang ideya na ang implasyon ay patuloy lamang sa pagtaas hanggang sa hinaharap, habang tumataas ang presyo ng mga produkto at serbisyo, inaasahan na ng mga manggagawa na tataas pa sa hinaharap ang mga presyo na ito kaya sila ay hihingi ng karagdagan na sweldo upang mapanatili ang kanilang estado ng pamumuhay.  

Ang mataas na implasyon ay nagtutulak sa mga manggagawa na humingi ng dagdag na sweldo upang makasabay ang kanilang sweldo sa patuloy na pagtaas ng mga presyo ng bilihin. Ang pagtaas ng sweldo ay nagtutulak para mga may-ari ng negosyo na magtaas ng presyo ng kanilang mga produkto. Ang siklo ng pagtaas ng sweldo at presyo ay maaaring magdulot ng “wage spiral” kung saan patuloy ang pagtaas ng implasyon dahil sa hindi matapos na pagtataas ng sweldo at presyo ng mga bilihin.

Paano masusukat ang Implasyon?

Ang pagtaas ng implasyon ay sinusukat pamamagitan ng pag-alam sa Inflation Rate(IR). Ang Inflation rate ay nakukuha sa pamamagitan ng formula na ito:

Ang CPI ay tanda ng pagbabago ng kabuuang presyo ng isang basket ng mga produkto at serbisyo na karaniwang binibili ng isang sambahayan (household) sa isang taon kumpara sa presyo nito sa itinakdang taon (base year).

Ano ang mga Epekto ng Implasyon?

Negatibong epekto ng implasyon.

Bibili ang mga tao ng mga matitibay at mga non-persishable goods upang maiwasan ang patuloy na pagbaba ng kakayahan nila na bumili ng kanilang pangagailangan. Ito ay nagdudulot ng malubahang kakulangan sa mga hoarded na mga produkto. Ang kakulangan na ito ay nagdudulot ng mabilis na pagtaas ng presyo ng hoarded na produkto.

Pag-aalsa at mga protesta

Ang patuloy na pagtaas ng mga presyo ay nagdudulot ng galit sa mga mamamayan at nagiging sanhi para magprotesta sila laban sa pamahalaan .

Hyperinflation

Dahil sa mas mataas na implasyon, ang mga tao ay mas nanaisihin pa na itago o ipunin ang kanilang mga pera at hindi ito gamitin. Ito ay nagdudulot ng lalong pagbilis ng implasyon dahil sa nagiging sagabal sa paggalaw ng ekonomiya ang labis na pagtatago ng salapi. Dahil sa kukunti lamang ang salapi na nasa sirkulasyon, napipilitan ang mga awtoridad na mag-imprenta ng karagdagan nap era na lalong nagdudulot ng implasyon.

Kakulangan sa sweldo

Dahil sa patuloy na pagtaas ng mga presyo ng bilihin, unti-unti lumiliit ang halaga na sweldo ng isang ordinaryong mangagawa.

Epekto sa nagpapautang

ang perang pinautang ng isang isang institusyon o indibdwal ay unti-unting nababawasan ang halaga ng bumabalik sa kanilang salapi. Ang halaga na pinautang nila sa isang tao ay hindi na katumbas na babalik na halaga sa kanila. Ito ang rason kung bakit mas mataas ang interes ng mga utang na tumatagal ng lagpas ng 3 taon.

Positibong Epekto ng Implasyon

Mas mataas na kita para sa mga producer.

Ang mga Producer ay nakakaranas ng mas malaking kita dahil ibinebenta nila sa mas mataas na presyo ang kanilang mga produkto.

Malaking balik sa mga namumuhunan

Ang mga negosyante at namumuhunan ay nakakaranas ng dagdag na balik mula sa kanilang mga investments tuwing mayroong implasyon.

Mas mabilis na paglago ng Ekonomiya

Kung ang pagtaas ng demand ang nagdulot ng implasyon, ito ay nagdudulot ng mabilis na pagtaas sa ekonomiya dahil sa ang mga producers ay maglalaan ng karagdanan na puhunan upang lumikha na mas maraming supply para masabayan ang pagtaas ng demand.

Iba pang Artikulo

Ang mga Haligi ng Disenteng Paggawa Ano ang Elasticity at Price Elasticity? 4 na Gamit ng Salapi

Mga Sanggunian

Consumer Price Index , psa.gov.ph Inflation , investopedia.com Mark Blaug, “ Economic Theory in Retrospect “, pg. 129 Milton H. Spencer, “Contemporary Economics”, pg. 150 What is Inflation? financialexpress.com

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Inflation In Tagalog

Ang Inflation ay ang pangkalahatang pagtaas ng presyo ng mga produkto at serbisyo sa paglipas ng panahon.

Nangangahulugan ito na ang parehong halaga ng pera ay maaari na lamang makabili ng mas kaunting mga produkto at serbisyo kaysa sa dati, o sa madaling sabi ay nababawasan ang halaga ng pera. Karaniwang sinusukat ang inflation bilang isang porsyento kung saan ang mas mataas na porsyento ay nagpapahiwatig ng mas mataas na rate ng inflation.

Ang inflation maaari ding humantong sa hyperinflation. Ang hyperinflation ay isang mabilis at hindi makontrol na pagtaas sa pangkalahatang presyo ng mga produkto at serbisyo. Ito ay karaniwang tinutukoy bilang isang rate ng inflation na higit sa 50% bawat buwan, o higit sa 1,000% bawat taon.

Ang hyperinflation ay maaaring mangyari kapag ang isang ekonomiya ay nahaharap sa matinding pang-ekonomiya o pulitikal na problema, at maaari itong magdulot ng malalang epekto para sa mga tao at negosyo sa apektadong bansa.

Mga Dahilan ng Inflation

Mayroong ilang mga sanhi ng inflation, kabilang ang pagtaas ng suplay ng pera, pagtaas ng gastusin ng gobyerno, at pagtaas ng demand para sa mga produkto at serbisyo.

Isa sa mga pangunahing dahilan ng inflation ay ang pagtaas ng suplay ng pera.

Kapag tumaas ang suplay ng pera, mas maraming pera ang magagamit ng mga tao para makabili ng mga produkto at serbisyo, at maaaring itong humantong sa mas mataas na presyo. Halimbawa, kung ang Bangko Sentral ay nag-imprenta ng mas maraming pera at inilalagay ito sa sirkulasyon, magkakaroon ng mas maraming pera para makabili ng parehong halaga ng mga produkto at serbisyo, na maaaring magtaas ng mga presyo.

Ito ay dahil sa pagdami ng pera ng mga tao, tumataas ang demand para sa mga produkto at serbisyo kaya ito ay natural ng nagtataas ng presyo. Ito ay tinatawag na Law of Supply and Demand sa Economics.

Pag-Gastos ng Gobyerno

Ang isa pang dahilan ng inflation ay ang pagtaas ng pag-gastos ng gobyerno. Kapag tinaasan ng gobyerno ang pag-gastos, maaari itong humantong sa pagtaas ng demand para sa mga produkto at serbisyo, na maaaring magtaas ng mga presyo.

Halimbawa, kung tataasan ng gobyerno ang paggasta sa mga proyektong pang-imprastraktura, maaari itong lumikha ng mga trabaho at pataasin ang demand o kakayahan ng mga tao para bumili ng mas maraming produkto at serbisyo, na humahantong sa mas mataas na presyo.

Mataas na Halaga ng Raw Materials

Ang inflation ay maaari ding sanhi ng mga bagay na labas ng isang ekonomiya, tulad ng pagtaas ng halaga ng mga raw materials o pagbaba ng supply ng mga produkto at serbisyo.

Halimbawa, kung tumaas ang presyo ng langis, maaari itong humantong sa mas mataas na gastos para sa transportasyon at enerhiya, na maaaring humantong sa mas mataas na presyo para sa mga kalakal at serbisyo.

Pagtaas ng Pasahod

Ang inflation ay maaari ding sanhi ng pagtaas ng sahod. Kapag tumaas ang sahod, mas maraming pera ang mga manggagawa para gastusin sa mga produkto at serbisyo, na maaaring humantong sa mas mataas na presyo.

Halimbawa, kung tumanggap ang mga manggagawa ng pagtaas ng suweldo, magkakaroon sila ng mas maraming pera na gagastusin, na maaaring magpapataas ng demand para sa mga produkto at serbisyo, na humahantong sa mas mataas na presyo.

Mas mataas na demand, mas mataas na presyo ( Law of Supply and Demand ).

Expectations Sa Merkado

Ang inflation ay maaari ding sanhi ng mga expectation sa merkado . Kung inaasahan ng mga tao na tataas ang mga presyo sa hinaharap, maaaring mas gumastos sila ng pera ngayon, bago tumaas ang mga presyo.

Maaari itong lumikha ng isang self-fulfilling na propesiya, kung saan ang mga inaasahan na mas mataas na mga presyo ay magkatotoo at humantong nga sa mas mataas na mga presyo.

Epekto ng Inflation

Ang inflation ay may positibo at negatibong epekto sa isang ekonomiya.

Sa positibong panig, maaaring hikayatin ng inflation ang mga mamimili na gumastos ng pera at bumili bago pa tumaas ang mga presyo. Makakatulong ito upang pasiglahin ang paglago ng ekonomiya at lumikha ng mga trabaho.

Sa negatibong panig, ang inflation ay maaaring mabawasan ang kakayanang bumili ng mga mamimili, at ginagawang mas mahirap para sa kanila ang magbayad para sa mga kalakal at serbisyo na kailangan nila. Ang inflation ay maaari ding humantong sa kawalan ng katiyakan at kawalang-katatagan sa ekonomiya, na maaaring makapagpahina sa mga negosyo at magpababa ng tiwala ng mga investor.

Pagbaba ng Purchasing Power o Pagbaba ng Halaga ng Pera

Isa sa mga pangunahing negatibong epekto ng inflation ay ang paghina ng kakakayahang bumili ng mga mamimili.

Kapag tumaas ang mga presyo, ang mga mamimili ay kailangang gumastos ng mas maraming pera upang makabili ng parehong mga kalakal at serbisyo, na nangangahulugan na sila ay may mas kaunting pera upang gastusin sa iba pang mga bagay.

Halimbawa, kung tumaas ang presyo ng pagkain, maaaring kailanganin ng mga mamimili na gumastos ng higit pa sa kanilang kita para sa pagkain. Dahil dito, mas kaunting pera nalang ang matitira sa kanila para sa iba pang mga gastusin tulad ng pabahay, transportasyon, at healthcare.

Epekto Sa Negosyo

Ang inflation ay maaari ring humantong sa kawalan ng katiyakan at kawalang-tatag sa ekonomiya.

Kapag tumataas ang mga presyo, maaaring mahirap para sa mga negosyo na i-forecast ang kanilang mga gastos at kita, at dahil dito maaaring maging mas mahirap para sa kanila na magplano at mamuhunan.

Ito ay maaaring humantong sa mas mababang antas ng pamumuhunan at pagnenegosyo at maaaring makapagpabagal ng paglago ng ekonomiya at mga trabaho.

Pagtaas ng Antas ng Kahirapan

Ang inflation ay maaari ding lumikha ng hindi pagkakapantay-pantay sa isang ekonomiya. Kapag tumataas ang mga presyo, ang mga taong may fixed income, tulad ng mga pensiyonado at mga karaniwang tao, maaaring mahirapan silang bayaran ang mga prdukto at serbisyo na kailangan nila.

Ito ay maaaring humantong sa pagtaas ng kahirapan at social unrest.

Paano Malalabanan ang Inflation

Upang ma-kontrol ang inflation, ang mga Bangko Sentral ay gumagamit ng patakaran sa pananalapi o monetary policies upang kontrolin ang supply ng pera at mga rate ng interes.

Ang patakaran sa pananalapi ay ang paggamit ng suplay ng pera at mga rate ng interes upang maimpluwensyahan ang ekonomiya. Ang Bangko Sentral ay maaaring gumamit ng iba’t ibang mga tool upang ipatupad ang patakaran sa pananalapi, kabilang na ang mga open market operations, reserve requirements, at mga discount rates .

Open Market Operations

Ang isa sa mga pangunahing tool ng monetary policy ay ang open market operations .

Ang mga open market operations ay ang pagbili at pagbebenta ng government securities ng Banko Sentral sa open market. Kapag ang Bangko Sentral ay bumili ng mga government securities, pinatataas nito ang suplay ng pera, na maaaring humantong sa mas mataas na inflation.

Kapag ang Bangko Sentral naman ay nagbebenta ng mga government securities, binabawasan nito ang suplay ng pera, na maaaring makapag pababa sa inflation.

Reserve Requirements

Ang isa pang tool ng patakaran sa pananalapi o monetary policy ay ang reserve requirements .

Ang reserve requirements ay ang pinakamababang halaga ng pera na kinakailangang i-hold ng mga bangko bilang reserba. Kapag ang Bangko Sentral  ay nagdaragdag ng mga kinakailangan sa reserba, binabawasan nito ang halaga ng pera na maaaring ipahiram ng mga bangko, na maaaring humantong sa mas mababang inflation.

Kapag binawasan ng Bangko Sentral ang mga kinakailangan sa reserba, pinapataas nito ang halaga ng pera na maaaring ipahiram ng mga bangko, at ito ay maaaring humantong sa mas mataas na inflation.

Discount Rates

Ang ikatlong tool ng patakaran sa pananalapi ay ang mga discount rate .

Ang discount rate ay ang rate ng interes na sinisingil ng Bangko Sentral sa mga bangko na humihiram ng pera mula dito. Kapag tinaasan ng Bangko Sentral ang rate ng diskwento, ginagawa nitong mas mahal ang paghiram, na maaaring humantong sa mas mababang inflation.

Kapag binabawasan ng sentral na bangko ang rate ng diskwento, ginagawa nitong mas mura ang paghiram o pag-utang na maaaring humantong sa mas mataas na inflation.

Ano Ang Dapat Gawin Kapag Mataas ang Inflation

Kapag mataas ang inflation, ang mga ordinaryong tao ay maaaring gumawa ng ilang hakbang upang protektahan ang kanilang purchasing power at ma-manage ng mabuti ang kanilang mga pananalapi.

Una , dapat subaybayan ng mga tao ang inflation rate at maunawaan kung paano ito nakakaapekto sa kanilang pananalapi. Ang inflation rate ay ang porsyento ng pagbabago sa Consumer Price Index (CPI) mula sa isang panahon patungo sa isa pa.

Ang CPI ay isang sukatan ng average na presyo ng isang basket ng mga produkto at serbisyo na binibili ng mga mamimili. Sa pamamagitan ng pagsubaybay sa inflation rate at ang mga presyo ng mga bilihin at serbisyo, mauunawaan ng mga ordinaryong tao kung paano nakakaapekto ang inflation sa kanilang pananalapi.

Pangalawa , ang mga tao ay dapat i-manage ng maayos ang kanilang mga utang. Kapag mataas ang inflation, bumababa ang halaga ng pera, ibig sabihin, tumataas ang tunay na halaga ng utang. Kapag itoy mangyari, maaari nitong gawing mas mahirap ang pagbabayad ng utang, lalo na kung ang rate ng interes sa utang ay fixed.

Upang ma-manage ang utang sa panahon ng inflation, dapat subukan ng mga tao na bayaran ang kanilang mga utang sa lalong madaling panahon, at iwasang kumuha ng mga bagong utang kung hindi naman kinakailangan.

Pangatlo , dapat isaalang-alang ng mga tao ang pamumuhunan sa mga asset na malamang na tumaas ang halaga sa panahon ng inflation. Halimbawa, ang mga stock, real estate, at mga kalakal na madalas na itinuturing na magandang pamumuhunan sa panahon ng inflation.

Dahil malamang na tumaas ang halaga nito habang bumababa ang halaga ng pera. Sa pamamagitan ng pamumuhunan sa mga ganitong uri ng asset, mapoprotektahan ng mga tao ang kanilang purchasing power at palaguin ang kanilang pera.

Ikaapat, dapat isaalang-alang ng mga ordinaryong mamamayan ang pagsasaayos ng kanilang mga gawi sa paggastos o spending habits sa panahon ng inflation.

Kapag tumataas ang mga presyo, maaaring kailanganin ng mga ordinaryong tao na bawasan ang mga wants o discretionary na paggastos at pagtuunan na lamang ng pansin ang mahahalagang gastos tulad ng pagkain, pabahay, at  pangkalusugan. Sa pamamagitan ng pagbawas sa kanilang paggasta, mapoprotektahan ng mga tao ang kanilang purchasing power at maiwasan ang mga problema sa pananalapi.

Bilang buod, kapag mataas ang inflation, dapat subaybayan ng mga tao ang rate ng inflation at maunawaan kung paano ito nakakaapekto sa kanilang pananalapi. Dapat din nilang pamahalaan ang kanilang utang nang maayos, mamuhunan sa mga asset na malamang na tumaas ang halaga sa hinaharap, at ayusin ang kanilang mga gawi sa paggastos. Ito ay upang maprotektahan ang kanilang purchasing power o halaga ng kanilang pera.

Sa pamamagitan ng pagsasagawa ng mga hakbang na ito, ang mga ordinaryong mamamayan ay maaaring ma-manage ng maayos ang kanilang mga pananalapi at makasabay sa mga hamon ng inflation.

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Pamamahala sa bilis ng pagtaas ng presyo

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AYON sa mga ekonomista ng iba’t ibang bangko at institusyong pananaliksik sa Metro Manila ang bilis ng pagtaas ng pangkalahatang presyo ng mga bilihin o inflation rate ay tinataya sa 5.4% ngayong Hunyo 2023 relatibo noong Hunyo 2022. Mas mabagal ito sa naitalang 6.1% noong nakaraang buwan. Ang balitang ito ay lumabas sa The Manila Times, Hulyo 3, 2023

Ang inflation rate ay ang bilis ng pagbabago sa pangkalatahang presyo ng mga bilihin sa loob ng isang taon. Sa dami ng mga produkto at serbisyong ipinagbibili sa loob ng ekonomiya, kailangan ng isang pangkakalatahang presyo upang isabuod ang galaw ng maraming presyo.

Ito ay isinasagawa batay sa proporsyon ng mga produkto at serbisyo sa gastusin ng isang pangkaraniwang mamimili na nakapaloob sa basket ng kanilang mga bilihin.

Halimbawa, may apat na pangunahing produkto sa basket na ito na may kani-kanilang proporsyon sa basket:  bigas (60%), gasolina (20%), kuryente at tubig (15%) at (damit (5%). Kung ang presyo ng mga nasabing produkto ay may iba’t ibang bilis ng pagtaas tulad halimbawa: bigas ay tumaas ng 4% samantalang ang gasolina ay tumaas ng 2%, habang ang kuryente at tubig ay tumaas ng 1% at ang damit ay tumaas ng 10 porsyento.

Ang payak na average o simple average na pagtaas ng presyo o inflation rate ay tinataya sa 4.25 porsiyento. Ngunit ito ay hindi makatotohanan dahil ipinagpapalagay na pare-pareho ang  proporsyon ng mga produkto sa basket. Kung isasama natin sa kalkulasyon ang nag-iibang proporsyon ng mga produkto sa basket, ang average ayon sa bigat o weighted average na pagtaas ng presyo o inflation rate ay 3.45 porsiyento lamang. Ang nabanggit na inflation rate ay mas makatotohanan dahil halos malapit ito sa 4% na pagtaas ng presyo ng bigas dahil ang bigas ang may pinakamalaking proporsyon sa pagkonsumo ng mga mamimili.

Bakit tumataas ang presyo ng mga bilihin? Ang mga dahilan ay batay sa demand at suplay ng produkto. Halimbawa, ang presyo ng gasolina ay nakabatay sa nagbabagong demand nito sa buong daigdig. Kapag taglamig, tumataas ang presyo ng krudo sa bilihang internasyonal dahil tumataas ang demand ng mga pamahayan sa Amerika del Norte at Europa.

Samantala, ang kakulangan ng suplay sa loob ng bansa ng bigas, sibuyas, asukal at iba pang produkto ay nagbabadya ng pagtaas ng presyo. Kapag nagdaragdag ng suplay sa pamamagitan ng pag-aangkat, ang presyo ng mga nabanggit na produkto ay nagbababaan. Sa ating bansa, dahil ang pagkain ang may pinakamalaking bahagi sa basket ng mga bilihin ang pangunahing sanhi ng pagtaas ng inflation rate ay nakaugat sa kakulangan ng suplay ng produkto.

Marami ang nagtatanong sa akin kung bakit ang tugon ng pamahalaan sa pagpapahupa sa inflation rate ay ang paghihigpit sa patakatarang pananalapi na nagpapababa sa suplay ng salapi sa ekonomiya samantalang ang pangunahing sanhi ng inflation rate sa Pilipinas ay nakabatay sa mga dahilang suplay tulad ng kakulangan ng lokal na produksyon ng bigas, asukal, sibuyas?

Isa sa mga dahilan ay wala sa kamay ng pamahalaan ang desisyon ng mga prodyuser na itaas ang suplay ng mga pangunahing produkto. Ikawala, may mahabang panahon ang hihintayin bago maitaas ang suplay. Ikatlo, ito ang pinakamadali at agarang tugon ng pamahalaan.

Sa pagbaba ng suplay ng salapi ng pamahalaan itinataas nito ang interes rate, ang presyo ng salapi, na magpapababa naman sa iba’t ibang uri ng paggastos kasama na ang pagkonsumo sa mga pangunahing bilihin at ito ang tuluyang nagpapababa sa pwersa sa pagtaas ng pangkalahatang presyo. Ang ganitong patakaran ay may malaking sakripisyo. Ang mataas ng interes rate ay hindi lamang nagbababa sa pagkonsumo ngunit nagpapababa rin sa pangangapital at guguling pampahahalan at pagluluwas. Ito ay nagpapabagal sa paglaki ng ekonomiya.

Madali at agarang gawin ang patakarang ito  ngunit nakapalaki ng sakripisyo sa buong ekonomiya. Ang pangunahing mensahe ng ekonomiks, sa bawat aksyon, may katapat na sakripisyo, ay lumalabas na naman sa patakarang ito.

Mga benepisyo at sakripisyo ng fiscal deficit

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Rising Prices, Sinking Hopes: How Inflation Affects Filipinos’ Lives

Do you remember the time when Coke bottles were still ₱6 and pandesals only cost ₱5 for three pieces? Those were some of the good times when you could still buy much with less money.

But things have changed now. You could buy a whole meal’s worth for just ₱20 before; but now, your ₱20 could only buy so little!

The main culprit – is inflation or the increase of prices over a given period. Such a phenomenon is normal and a part of daily economics, but its current rate is seemingly higher than tolerable, affecting Filipinos and the way they consume things.

Inflation is usually determined by three main factors, including demand-pull inflation, cost-push inflation, and built-in inflation. Demand-pull inflation happens when demand for goods/services exceeds production capacity, cost-push inflation happens when production costs increase prices, and built-in inflation happens when wages rise as a result of price increases, which creates a wage-price spiral.

Back in 2020, the inflation rate remained at a steady rate of 2.4 percent. Commodities during that time were still pretty affordable and the purchasing power of the peso was still quite strong. But with the inflation rate reaching a whopping rate of 6.4 percent last July, it would now take more or less twice the money spent before to buy particular goods.

As a result, many Filipinos have been aching as they dig deeper into their pockets, helplessly seeing prices go up continuously. Some even say that what used to be their budget for a week has now shrunk to mere three days only, making both budgets and belts tighter.

Lifestyles are forced to change as prices continue to soar, with most Filipinos lowering their standards of living. Those that rely on their fixed incomes now have to find other sources of income or they run the risk of having insufficient funds for sustenance. However, there are ways to manage these effects, such as planning, exploring other sources of income, reducing expenses, and venturing into investments.

You may have already started to experience the effects of inflation, with you affording less than before. Unfortunately, the inflation rate has been forecasted to keep going up, which calls for drastic measures.

But still, you can always choose to look at the bright side and make the most of the opportunities that you are presented with. With the right mindset and planning, you will be able to make it through despite the inflation.

• Filipino Problem
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Essay on Inflation In Philippines

Students are often asked to write an essay on Inflation In Philippines in their schools and colleges. And if you’re also looking for the same, we have created 100-word, 250-word, and 500-word essays on the topic.

Let’s take a look…

100 Words Essay on Inflation In Philippines

What is inflation.

Inflation means the prices of things we buy are going up. In the Philippines, when prices rise, it becomes harder for people to afford food, clothes, and other items. This can happen when there’s too much money to spend but not enough goods, or when the cost to make products goes higher.

Inflation in the Philippines

The Philippines often experiences inflation. This can be due to natural disasters affecting crops, changes in global oil prices, or government actions. When inflation occurs, Filipino families might struggle to buy what they need, which can be tough for everyone.

Effects on Daily Life

Because of inflation, families in the Philippines might have to change how they spend money. They may buy less food or cheaper items to save money. Sometimes, even going to school or getting healthcare can become more expensive, making life challenging for many people.

250 Words Essay on Inflation In Philippines

Understanding inflation in the philippines.

Inflation means the increase in prices of things we buy, like food, clothes, and toys. In the Philippines, just like in other countries, prices can go up over time. This can make life hard for families, especially if they don’t have a lot of money.

Causes of Inflation

Effects of inflation.

When prices go up, it’s tough for people. They might not be able to buy as much with their money, and this can be stressful. Parents might have to work more to earn more money, and sometimes, kids might not get new toys or clothes as often.

What the Government Does

The government in the Philippines tries to control inflation. They can change how much money is in the economy or make rules about prices to help keep them from going up too fast. They do this because they want to make sure that people can afford what they need.

Inflation in the Philippines is a challenge that affects everyone. It’s important to understand why it happens and how it changes the way people live. While it can be tough when prices go up, the government works to manage inflation for the good of the country.

500 Words Essay on Inflation In Philippines

Inflation is when the prices of things we buy go up. Imagine you could buy a toy car for one peso last year, but this year the same car costs two pesos. That’s inflation: the money you have buys less than before. This can happen with toys, food, clothes, and almost everything. In the Philippines, like in many countries, inflation affects how people live because they need more money to buy the same things.

Causes of Inflation in the Philippines

In the Philippines, inflation happens for a few reasons. Sometimes, when there are not enough goods like rice or vegetables, prices go up because many people want these items but there aren’t enough for everyone. This is called “demand-pull inflation.” Another reason is “cost-push inflation,” which is when the cost to make products goes up. For example, if the price of gas increases, it costs more to deliver goods to stores, so the prices of these goods go up.

Effects of Inflation on People

Inflation can make life hard for families. Parents have to spend more money on the same things, so they might have less money left for saving or for fun activities. Kids might notice that their allowance doesn’t buy as much candy or toys as it used to. If inflation is high, people might worry about prices going up even more and rush to buy things, which can make inflation worse.

How the Government Handles Inflation

The government of the Philippines tries to control inflation to make sure prices don’t rise too fast. The Central Bank of the Philippines can change interest rates, which is like changing the cost of borrowing money. If it’s more expensive to borrow money, people and businesses might spend less, and this can help slow down inflation.

What Can People Do?

People can also do things to handle inflation. Families can plan their spending and look for better prices before buying something. It’s important to learn about money and how to use it wisely, especially when prices are going up.

Inflation in the Philippines is when prices rise and money buys less. It can be caused by not enough goods, higher costs to make products, or the country’s money value changing. Inflation affects how people live, but the government and people can take steps to manage it. By understanding what inflation is and how it works, even school students can be better prepared to deal with it in their daily lives.

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Has Inflation Hurt the Poor? Regional Analysis in the Philippines

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This paper measures the impact of price changes on poverty using the Philippines as an example, and develops an empirically operational price index called the price index for the poor.

• http://hdl.handle.net/11540/1769

This paper measures the impact of price changes on poverty using the Philippines as an example. The impact of price changes is captured by the price elasticity of poverty for three widely used poverty measures, namely, headcount ratio, poverty gap ratio, and severity of poverty. An empirically operational price index called the price index for the poor is developed, which indicates whether the price changes hurt the poor relatively more than the non-poor. Furthermore, the paper develops formulae for aggregating regional price indices into the national price indices. The results show that since 2003, prices increases have led to greater suffering for the poor, particularly the ultra poor.

• Introduction
• Impact of Price Changes on Average Standard of Living
• Regional Price Impact on Average Standard of Living
• Impact of Price Changes on Poverty
• Regional Impact of Price Changes on Poverty
• Price Index for the Poor
• Within and between Regional Inequality
• Empirical Illustration
• Conclusions
• Appendix Tables

Additional Details

Published Version

Son, Hyun H. 2014. "Has Inflation Hurt the Poor? Regional Analysis in the Philippines." Review of Economics and Finance 4 (2): 39–60. http://www.bapress.ca/ref/article.html?id=421 .

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Inflation making lives difficult for people in the Philippines

For many Filipinos, the increasing cost of basic commodities was that of a ‘developed nation’.

The Philippines is in the middle of battling record inflation, something which President Ferdinand Marcos Jr says is “out of control”.

For many Filipinos, the increasing cost of basic commodities was that of a “developed nation”.

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World welcomes 2023 amid concerns over war and inflation, power outages at philippine airports disrupt travel for thousands, philippine economy beats expectations, growing 7.6 percent in q3, imf head flags inflation, china slowdown as risks to asia.

The president, while touting economic recovery, has also acknowledged the high costs of basic goods which he said was running “rampant”.

One of the most significant cooking staples in the country, onions, were being sold for about $10/kg, “among some of the most expensive onions in the world”, Al Jazeera’s Barnaby Lo reported from the capital, Manila, adding that people have described their living situation as “very difficult”.

“I only make $6 to $7 a day. That is barely enough for food,” Poldy Baltazar, a driver with a family of six, told Al Jazeera.

According to the Manila resident, before the pandemic, he made daily trips as a driver, but COVID restrictions now limit him to three or four journeys a week.

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EXPLAINER: How inflation affects you

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This is AI generated summarization, which may have errors. For context, always refer to the full article.

MANILA, Philippines – Did your grandparents ever tell you that they could buy a complete meal for only P1 back when they were younger?

Indeed, it can be quite difficult to imagine, since P1 today could only buy you a piece of candy. Food, rent, utilities, and basically everything else have gone up compared to several decades ago.

The movement of prices of goods and services over time is referred to as inflation .

How is inflation measured?  The Philippine Statistics Authority (PSA) releases inflation data every 1st week of the month for the public to be aware of just how much prices have changed compared to a year ago. 

Statisticians and experts measure inflation by looking at a “basket of goods” which “contain” what the typical Filipino consumes on a regular basis. ( IN CHARTS: What your P100 can buy under runaway inflation )

This “basket” contains the following:

• Food and non-alcoholic beverages
• Alcoholic beverages and tobacco
• Clothing and footwear
• Housing, water, electricity, gas and other fuels
• Furnishing, household equipment, and routine maintenance of the house
• Communication
• Recreation and culture
• Restaurants and miscellaneous goods and services

This long list of goods and their prices comprise the consumer price index (CPI). The annual percentage change in the CPI is then used to measure inflation.

What causes inflation?  Inflation may be driven either by supply or demand.

Supply-driven or cost-push inflation happens when the cost of producing goods, the prices of raw materials, and wages go up. (READ:  Rice prices soar as Duterte marks 2nd year in office )

In this scenario, there are fewer goods being produced due to the high costs of production, yet demand remains consistent. 

On the other hand, demand-pull inflation occurs when people’s demand outpace the ability of industries to supply goods. 

How does inflation affect you?  Inflation means you need to pay more for the same goods and services. 

One could also think of inflation as a reduction of the value of money, as consumers are able to purchase less than before. As inflation rises, the value of the peso diminishes more quickly. (READ: EXPLAINER: What is hyperinflation? )

Elevated prices of goods hit hardest those consumers who have not received salary increases over time. In effect, people have to constantly get a raise to keep up with the prices of goods.

High inflation is also not good for people who have long-term investments in banks, as it may erode the value of money.

Is inflation all bad?  No. In fact, the government wants inflation, but only within an acceptable range.

For instance, economic managers want inflation for 2018 to 2020 to settle between 2% and 4%. The problem, however, is that inflation in 2018 continues to shoot up beyond the target range. (WATCH: Rappler Talk: Making sense of the Philippine economy )

Revising monetary and trade  policies, as well as providing subsidies to the poor, are only some of the ways by which the government can restrain inflation within the acceptable range.

Inflation, especially when it is demand-driven, is an indicator that people have more money to spend and reflects a growing economy. (READ:  BSP’s interest hike won’t address supply-driven inflation – Pernia )

The government is also avoiding deflation, or the decline of prices of goods. While it may sound good, deflation is an indicator of anemic or poor economic activity. 

Low consumption slows down the economy, which would then lead to fewer jobs and opportunities.  – Rappler.com

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Essay on Inflation: Types, Causes and Effects

Essay on Inflation!

Essay on the Meaning of Inflation:

Inflation and unemployment are the two most talked-about words in the contemporary society. These two are the big problems that plague all the economies. Almost everyone is sure that he knows what inflation exactly is, but it remains a source of great deal of confusion because it is difficult to define it unambiguously.

Inflation is often defined in terms of its supposed causes. Inflation exists when money supply exceeds available goods and services. Or inflation is attributed to budget deficit financing. A deficit budget may be financed by additional money creation. But the situation of monetary expansion or budget deficit may not cause price level to rise. Hence the difficulty of defining ‘inflation’ .

Inflation may be defined as ‘a sustained upward trend in the general level of prices’ and not the price of only one or two goods. G. Ackley defined inflation as ‘a persistent and appreciable rise in the general level or average of prices’ . In other words, inflation is a state of rising price level, but not rise in the price level. It is not high prices but rising prices that constitute inflation.

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It is an increase in the overall price level. A small rise in prices or a sudden rise in prices is not inflation since these may reflect the short term workings of the market. It is to be pointed out here that inflation is a state of disequilibrium when there occurs a sustained rise in price level.

It is inflation if the prices of most goods go up. However, it is difficult to detect whether there is an upward trend in prices and whether this trend is sustained. That is why inflation is difficult to define in an unambiguous sense.

Let’s measure inflation rate. Suppose, in December 2007, the consumer price index was 193.6 and, in December 2008 it was 223.8. Thus the inflation rate during the last one year was 223.8 – 193.6/193.6 × 100 = 15.6%.

As inflation is a state of rising prices, deflation may be defined as a state of falling prices but not fall in prices. Deflation is, thus, the opposite of inflation, i.e., rise in the value or purchasing power of money. Disinflation is a slowing down of the rate of inflation.

Essay on the Types of Inflation :

As the nature of inflation is not uniform in an economy for all the time, it is wise to distinguish between different types of inflation. Such analysis is useful to study the distributional and other effects of inflation as well as to recommend anti-inflationary policies.

Inflation may be caused by a variety of factors. Its intensity or pace may be different at different times. It may also be classified in accordance with the reactions of the government toward inflation.

Thus, one may observe different types of inflation in the contemporary society:

(a) According to Causes:

i. Currency Inflation:

This type of inflation is caused by the printing of currency notes.

ii. Credit Inflation:

Being profit-making institutions, commercial banks sanction more loans and advances to the public than what the economy needs. Such credit expansion leads to a rise in price level.

iii. Deficit-Induced Inflation:

The budget of the government reflects a deficit when expenditure exceeds revenue. To meet this gap, the government may ask the central bank to print additional money. Since pumping of additional money is required to meet the budget deficit, any price rise may be called deficit-induced inflation.

iv. Demand-Pull Inflation:

An increase in aggregate demand over the available output leads to a rise in the price level. Such inflation is called demand-pull inflation (henceforth DPI). But why does aggregate demand rise? Classical economists attribute this rise in aggregate demand to money supply.

If the supply of money in an economy exceeds the available goods and services, DPI appears. It has been described by Coulborn as a situation of “too much money chasing too few goods” .

Note that, in this region, price level begins to rise. Ultimately, the economy reaches full employment situation, i.e., Range 3, where output does not rise but price level is pulled upward. This is demand-pull inflation. The essence of this type of inflation is “too much spending chasing too few goods.”

v. Cost-Push Inflation:

Inflation in an economy may arise from the overall increase in the cost of production. This type of inflation is known as cost-push inflation (henceforth CPI). Cost of production may rise due to increase in the price of raw materials, wages, etc. Often trade unions are blamed for wage rise since wage rate is not market-determined. Higher wage means higher cost of production.

Prices of commodities are thereby increased. A wage-price spiral comes into operation. But, at the same time, firms are to be blamed also for the price rise since they simply raise prices to expand their profit margins. Thus we have two important variants of CPI: wage-push inflation and profit-push inflation. Anyway, CPI stems from the leftward shift of the aggregate supply curve.

The price level thus determined is OP 1 . As aggregate demand curve shifts to AD 2 , price level rises to OP 2 . Thus, an increase in aggregate demand at the full employment stage leads to an increase in price level only, rather than the level of output. However, how much price level will rise following an increase in aggregate demand depends on the slope of the AS curve.

Causes of Demand-Pull Inflation :

DPI originates in the monetary sector. Monetarists’ argument that “only money matters” is based on the assumption that at or near full employment, excessive money supply will increase aggregate demand and will thus cause inflation.

An increase in nominal money supply shifts aggregate demand curve rightward. This enables people to hold excess cash balances. Spending of excess cash balances by them causes price level to rise. Price level will continue to rise until aggregate demand equals aggregate supply.

Keynesians argue that inflation originates in the non-monetary sector or the real sector. Aggregate demand may rise if there is an increase in consumption expenditure following a tax cut. There may be an autonomous increase in business investment or government expenditure. Governmental expenditure is inflationary if the needed money is procured by the government by printing additional money.

In brief, an increase in aggregate demand i.e., increase in (C + I + G + X – M) causes price level to rise. However, aggregate demand may rise following an increase in money supply generated by the printing of additional money (classical argument) which drives prices upward. Thus, money plays a vital role. That is why Milton Friedman believes that inflation is always and everywhere a monetary phenomenon.

There are other reasons that may push aggregate demand and, hence, price level upwards. For instance, growth of population stimulates aggregate demand. Higher export earnings increase the purchasing power of the exporting countries.

Additional purchasing power means additional aggregate demand. Purchasing power and, hence, aggregate demand, may also go up if government repays public debt. Again, there is a tendency on the part of the holders of black money to spend on conspicuous consumption goods. Such tendency fuels inflationary fire. Thus, DPI is caused by a variety of factors.

Cost-Push Inflation Theory :

In addition to aggregate demand, aggregate supply also generates inflationary process. As inflation is caused by a leftward shift of the aggregate supply, we call it CPI. CPI is usually associated with the non-monetary factors. CPI arises due to the increase in cost of production. Cost of production may rise due to a rise in the cost of raw materials or increase in wages.

Such increases in costs are passed on to consumers by firms by raising the prices of the products. Rising wages lead to rising costs. Rising costs lead to rising prices. And rising prices, again, prompt trade unions to demand higher wages. Thus, an inflationary wage-price spiral starts.

This causes aggregate supply curve to shift leftward. This can be demonstrated graphically (Fig. 11.4) where AS 1 is the initial aggregate supply curve. Below the full employment stage this AS curve is positive sloping and at full employment stage it becomes perfectly inelastic. Intersection point (E 1 ) of AD 1 and AS 1 curves determines the price level.

Now, there is a leftward shift of aggregate supply curve to AS 2 . With no change in aggregate demand, this causes price level to rise to OP 2 and output to fall to OY 2 .

With the reduction in output, employment in the economy declines or unemployment rises. Further shift in the AS curve to AS 2 results in higher price level (OP 3 ) and a lower volume of aggregate output (OY 3 ). Thus, CPI may arise even below the full employment (Y f ) stage.

Causes of CPI :

It is the cost factors that pull the prices upward. One of the important causes of price rise is the rise in price of raw materials. For instance, by an administrative order the government may hike the price of petrol or diesel or freight rate. Firms buy these inputs now at a higher price. This leads to an upward pressure on cost of production.

Not only this, CPI is often imported from outside the economy. Increase in the price of petrol by OPEC compels the government to increase the price of petrol and diesel. These two important raw materials are needed by every sector, especially the transport sector. As a result, transport costs go up resulting in higher general price level.

Again, CPI may be induced by wage-push inflation or profit-push inflation. Trade unions demand higher money wages as a compensation against inflationary price rise. If increase in money wages exceeds labour productivity, aggregate supply will shift upward and leftward. Firms often exercise power by pushing up prices independently of consumer demand to expand their profit margins.

Fiscal policy changes, such as an increase in tax rates leads to an upward pressure in cost of production. For instance, an overall increase in excise tax of mass consumption goods is definitely inflationary. That is why government is then accused of causing inflation.

Finally, production setbacks may result in decreases in output. Natural disaster, exhaustion of natural resources, work stoppages, electric power cuts, etc., may cause aggregate output to decline.

In the midst of this output reduction, artificial scarcity of any goods by traders and hoarders just simply ignite the situation.

Inefficiency, corruption, mismanagement of the economy may also be the other reasons. Thus, inflation is caused by the interplay of various factors. A particular factor cannot be held responsible for inflationary price rise.

Essay on the Effects of Inflation :

People’s desires are inconsistent. When they act as buyers they want prices of goods and services to remain stable but as sellers they expect the prices of goods and services should go up. Such a happy outcome may arise for some individuals; “but, when this happens, others will be getting the worst of both worlds.” Since inflation reduces purchasing power it is bad.

The old people are in the habit of recalling the days when the price of say, meat per kilogram cost just 10 rupees. Today it is Rs. 250 per kilogram. This is true for all other commodities. When they enjoyed a better living standard. Imagine today, how worse we are! But meanwhile, wages and salaries of people have risen to a great height, compared to the ‘good old days’. This goes unusually untold.

When price level goes up, there is both a gainer and a loser. To evaluate the consequence of inflation, one must identify the nature of inflation which may be anticipated and unanticipated. If inflation is anticipated, people can adjust with the new situation and costs of inflation to the society will be smaller.

In reality, people cannot predict accurately future events or people often make mistakes in predicting the course of inflation. In other words, inflation may be unanticipated when people fail to adjust completely. This creates various problems.

One can study the effects of unanticipated inflation under two broad headings:

(i) Effect on distribution of income and wealth

(ii) Effect on economic growth.

(a) Effects of Inflation on Income and Wealth Distribution :

During inflation, usually people experience rise in incomes. But some people gain during inflation at the expense of others. Some individuals gain because their money incomes rise more rapidly than the prices and some lose because prices rise more rapidly than their incomes during inflation. Thus, it redistributes income and wealth.

Though no conclusive evidence can be cited, it can be asserted that following categories of people are affected by inflation differently:

i. Creditors and Debtors:

Borrowers gain and lenders lose during inflation because debts are fixed in rupee terms. When debts are repaid their real value declines by the price level increase and, hence, creditors lose. An individual may be interested in buying a house by taking a loan of Rs. 7 lakh from an institution for 7 years.

The borrower now welcomes inflation since he will have to pay less in real terms than when it was borrowed. Lender, in the process, loses since the rate of interest payable remains unaltered as per agreement. Because of inflation, the borrower is given ‘dear’ rupees, but pays back ‘cheap’ rupees.

However, if in an inflation-ridden economy creditors chronically loose, it is wise not to advance loans or to shut down business. Never does it happen. Rather, the loan- giving institution makes adequate safeguard against the erosion of real value.

ii. Bond and Debenture-Holders:

In an economy, there are some people who live on interest income—they suffer most.

Bondholders earn fixed interest income:

These people suffer a reduction in real income when prices rise. In other words, the value of one’s savings decline if the interest rate falls short of inflation rate. Similarly, beneficiaries from life insurance programmes are also hit badly by inflation since real value of savings deteriorate.

iii. Investors:

People who put their money in shares during inflation are expected to gain since the possibility of earning business profit brightens. Higher profit induces owners of firms to distribute profit among investors or shareholders.

iv. Salaried People and Wage-Earners:

Anyone earning a fixed income is damaged by inflation. Sometimes, unionized worker succeeds in raising wage rates of white-collar workers as a compensation against price rise. But wage rate changes with a long time lag. In other words, wage rate increases always lag behind price increases.

Naturally, inflation results in a reduction in real purchasing power of fixed income earners. On the other hand, people earning flexible incomes may gain during inflation. The nominal incomes of such people outstrip the general price rise. As a result, real incomes of this income group increase.

v. Profit-Earners, Speculators and Black Marketeers:

It is argued that profit-earners gain from inflation. Profit tends to rise during inflation. Seeing inflation, businessmen raise the prices of their products. This results in a bigger profit. Profit margin, however, may not be high when the rate of inflation climbs to a high level.

However, speculators dealing in business in essential commodities usually stand to gain by inflation. Black marketeers are also benefited by inflation.

Thus, there occurs a redistribution of income and wealth. It is said that rich becomes richer and poor becomes poorer during inflation. However, no such hard and fast generalizations can be made. It is clear that someone wins and someone loses from inflation.

These effects of inflation may persist if inflation is unanticipated. However, the redistributive burdens of inflation on income and wealth are most likely to be minimal if inflation is anticipated by the people.

With anticipated inflation, people can build up their strategies to cope with inflation. If the annual rate of inflation in an economy is anticipated correctly people will try to protect them against losses resulting from inflation.

Workers will demand 10 p.c. wage increase if inflation is expected to rise by 10 p.c. Similarly, a percentage of inflation premium will be demanded by creditors from debtors. Business firms will also fix prices of their products in accordance with the anticipated price rise. Now if the entire society “learns to live with inflation” , the redistributive effect of inflation will be minimal.

However, it is difficult to anticipate properly every episode of inflation. Further, even if it is anticipated it cannot be perfect. In addition, adjustment with the new expected inflationary conditions may not be possible for all categories of people. Thus, adverse redistributive effects are likely to occur.

Finally, anticipated inflation may also be costly to the society. If people’s expectation regarding future price rise become stronger they will hold less liquid money. Mere holding of cash balances during inflation is unwise since its real value declines. That is why people use their money balances in buying real estate, gold, jewellery, etc.

Such investment is referred to as unproductive investment. Thus, during inflation of anticipated variety, there occurs a diversion of resources from priority to non-priority or unproductive sectors.

b. Effect on Production and Economic Growth :

Inflation may or may not result in higher output. Below the full employment stage, inflation has a favourable effect on production. In general, profit is a rising function of the price level. An inflationary situation gives an incentive to businessmen to raise prices of their products so as to earn higher doses of profit.

Rising price and rising profit encourage firms to make larger investments. As a result, the multiplier effect of investment will come into operation resulting in higher national output. However, such a favourable effect of inflation will be temporary if wages and production costs rise very rapidly.

Further, inflationary situation may be associated with the fall in output, particularly if inflation is of the cost-push variety. Thus, there is no strict relationship between prices and output. An increase in aggregate demand will increase both prices and output, but a supply shock will raise prices and lower output.

Inflation may also lower down further production levels. It is commonly assumed that if inflationary tendencies nurtured by experienced inflation persist in future, people will now save less and consume more. Rising saving propensities will result in lower further outputs.

One may also argue that inflation creates an air of uncertainty in the minds of business community, particularly when the rate of inflation fluctuates. In the midst of rising inflationary trend, firms cannot accurately estimate their costs and revenues. Under the circumstance, business firms may be deterred in investing. This will adversely affect the growth performance of the economy.

However, slight dose of inflation is necessary for economic growth. Mild inflation has an encouraging effect on national output. But it is difficult to make the price rise of a creeping variety. High rate of inflation acts as a disincentive to long run economic growth. The way the hyperinflation affects economic growth is summed up here.

We know that hyperinflation discourages savings. A fall in savings means a lower rate of capital formation. A low rate of capital formation hinders economic growth. Further, during excessive price rise, there occurs an increase in unproductive investment in real estate, gold, jewellery, etc.

Above all, speculative businesses flourish during inflation resulting in artificial scarcities and, hence, further rise in prices. Again, following hyperinflation, export earnings decline resulting in a wide imbalance in the balance of payments account.

Often, galloping inflation results in a ‘flight’ of capital to foreign countries since people lose confidence and faith over the monetary arrangements of the country, thereby resulting in a scarcity of resources. Finally, real value of tax revenue also declines under the impact of hyperinflation. Government then experiences a shortfall in investible resources.

Thus, economists and policy makers are unanimous regarding the dangers of high price rise. But the consequence of hyperinflation is disastrous. In the past, some of the world economies (e.g., Germany after the First World War (1914-1918), Latin American countries in the 1980s) had been greatly ravaged by hyperinflation.

The German Inflation of 1920s was also Catastrophic:

During 1922, the German price level went up 5,470 per cent, in 1923, the situation worsened; the German price level rose 1,300,000,000 times. By October of 1923, the postage of the lightest letter sent from Germany to the United States was 200,000 marks.

Butter cost 1.5 million marks per pound, meat 2 million marks, a loaf of bread 200,000 marks, and an egg 60,000 marks Prices increased so rapidly that waiters changed the prices on the menu several times during the course of a lunch!! Sometimes, customers had to pay double the price listed on the menu when they observed it first!!!

During October 2008, Zimbabwe, under the President-ship of Robert G. Mugabe, experienced 231,000,000 p.c. (2.31 million p.c.) as against 1.2 million p.c. price rise in September 2008—a record after 1923. It is an unbelievable rate. In May 2008, the cost of price of a toilet paper itself and not the costs of the roll of the toilet paper came to 417 Zimbabwean dollars.

Anyway, people are harassed ultimately by the high rate of inflation. That is why it is said that ‘inflation is our public enemy number one’. Rising inflation rate is a sign of failure on the part of the government.

Related Articles:

• Essay on the Causes of Inflation (473 Words)
• Cost-Push Inflation and Demand-Pull or Mixed Inflation
• Demand Pull Inflation and Cost Push Inflation | Money
• Essay on Inflation: Meaning, Measurement and Causes

Fed's Bostic says inflation moving in 'right direction,' sees one Q4 rate cut

Inflation in the U.S. "appears to be narrowing" and that should allow the Federal Reserve to cut interest rates later this year, Atlanta Fed President Raphael Bostic said in a policy essay released on Thursday.

After concern that inflation might stall at an elevated level, Bostic said recent data point to renewed progress, including the fact that the share of goods and services increasing at a greater than 5% annual rate had dipped below 20% - more akin to where it was before the COVID-19 pandemic and similar to the share seen when inflation was slowing fast last year.

"It's moving in the right direction," Bostic said of a metric he has singled out as one of his touchstones for the U.S. central bank's battle against inflation that spiked to a 40-year high in 2022.

Inflation remains "elevated," according to the Fed's most recent policy statement, with the personal consumption expenditures price index rising at a 2.7% annual rate in April. The Fed's inflation target is 2%, and there has been little progress in recent months.

PCE inflation data for May will be released on Friday.

Bostic said that as things stand, "I continue to believe conditions will likely call for a cut in the federal funds rate in the fourth quarter of this year." In later comments to reporters, he said that one reason to be "patient" with that initial cut is so that it comes after inflation is on a clear path back to 2%, and can be seen as the first of a series of reductions.

Investors expect the rate cuts will start in September, with two quarter-percentage-point reductions by the end of this year versus the single rate cut that Bostic and many other Fed policymakers now anticipate.

"I'm not locked in to any particular policy path," Bostic said. "There are plausible scenarios in which more cuts, no cuts, or even a raise could be appropriate. I will let the data and conditions on the ground be my guide."

And recent data on jobs and economic growth, he said, point to "an orderly deceleration in activity that will restore balance between demand and supply in the economy ... It's really Econ 101."

Businesses in his southeastern district, he said in a press briefing following release of the essay, still regard inflation as the "chief concern," with most saying that current hiring and employment levels are sustainable.

Bostic said his sense is that there is no "cliff" ahead for the job market, and that he believes the Fed can meet its inflation goal "with labor markets ... that are tight by historical standards."

Election latest: Starmer avoids weighing in on US election - as minister admits 'none of' polls look good for Sunak

Sir Keir Starmer has distanced himself from a Labour colleague's previous criticism of Donald Trump, after a good night at a TV debate for the former US president. Earlier, the education secretary admitted to Sky News "none of" the polls were looking good for the Tories.

Friday 28 June 2024 09:37, UK

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Sir Keir Starmer is asked on the BBC about Nigel Farage - and it is put to him whether the Reform UK leader is racist.

The Labour leader says he doesn't want "call him names".

He does say, however, that comments which have come from Reform UK campaigners are racist, and condemns them.

You can read more about that below:

Speaking on BBC radio, Sir Keir Starmer is asked about the tax-free lump sums people can take from their pensions.

According to Hargreaves Lansdown, "this applies to the tax-free element of certain lump sums, capped at £268,275  - amounts exceeding this allowance are taxed at your marginal rate".

Sir Keir says: "It runs out in a number of years, and we're not going to renew it."

He then says, however, that Labour would review the plans in two or three years when they come up for renewal.

This, Sir Keir says, is not something he can promise now due to the economic conditions.

Labour leader Sir Keir Starmer is speaking on BBC radio to callers.

But the interview begins with questions about the debate in the US overnight - for which Joe Biden has been criticised.

Sir Keir says he has "enough on his plate" with his own election campaign.

But he says he will work with "whoever is president".

The Labour leader praises the "historic" nature of the relationship between the UK and the US.

And he says he doesn't think it would be "helpful" to comment on the contest on the other side of the pond.

Asked about previous comments shadow foreign secretary David Lammy made about Donald Trump - which were extremely critical - Sir Keir distances himself from the remarks.

SNP leader John Swinney is speaking to broadcasters this morning.

As a member of the Scottish parliament, he is not standing for election this month.

He has implored voters in Scotland to support his party to face up to what he says is an inevitable Labour win.

Exclusive polling for Sky News carried out by YouGov shows Labour is currently on 35%  in Scotland, compared to 29% for the SNP - a slight narrowing in the gap ( read more here ).

Mr Swinney says: "I think the election essentially has been decided in England.

"The Labour Party has a commanding lead over the Conservatives south of the border, and it's a certainty that Keir Starmer is going to become the next prime minister. 

"But in Scotland, there's a hotly contested election between the SNP and the Labour Party. 

"If they want to make sure that decisions about Scotland are made in Scotland for Scotland, then they've got to vote for the SNP because it's only SNP votes and SNP voices in the House of Commons that will hold the Labour government to account, given that they're going to win hands down in England."

Shadow chief secretary to the Treasury Darren Jones is out for Labour this morning.

Speaking to Sky News, he is asked about Labour's financial plans - especially with the tax burden at a 70-year-high.

Mr Jones says that, if his party wins, they will "inherit the county as it is - not as we might like it".

The situation on tax thresholds is put to the Labour man.

By keeping the levels at which people go up income tax bands frozen, more and more people end up paying higher taxes as wages naturally increase.

This effect has been dubbed a "stealth tax rise", and has led to greater proportions of people paying higher income tax rates than previously.

Mr Jones says: "We would like to unfreeze them, but of course we have to be able to afford to do so. 

"And we've not done that at this point in the election because the money's not available right now to be able to do that. 

"And that's why when you point to the Conservative Party's promise to change thresholds for certain voters, it's very clear that that's not a promise that anyone can believe, because the money's not there to pay for that commitment"

Sky News' deputy political editor Sam Coates and Politico's Jack Blanchard are here with their guide to the election day ahead.  

This is day 39 of the campaign. 

Jack and Sam talk about the leaders' final weekend, they discuss how Reform are continuing to be in the headlines, and following the Trump vs Biden debate, they look at the rest of the world, including the upcoming French election.

Email Jack and Sam: [email protected]

👉 Tap here to follow Politics at Jack and Sam's wherever you get your podcasts 👈

Speaking to Sky News this morning, Education Secretary Gillian Keegan has defended people gambling - as long as they do not rely on insider information.

This comes as the election betting scandal in the Conservative Party rumbles on.

Speaking to Sky News, Ms Keegan says: "I do not place bets on anything, least of all politics."

She adds that she doesn't know if "most MPs" are gamblers - adding that "clearly some will be".

"Betting is part of what many people do - and if you're placing a bet on an unknown outcome then, you know, that's something that people do all day, every day.

"But obviously where it's a problem is if you're placing bets on inside information."

Education Secretary Gillian Keegan is giving a frank summation of her party's situation in the election.

The Conservatives have remained around 20 points behind at Labour, and in some polls have fallen behind Reform.

Speaking to Sky News, Ms Keegan says the election campaign is "still going" and they are "still fighting for every vote".

"But clearly, you know, if you look at the 100 or so polls that have been done since the election was called - I think is by far the most polls that we've ever had done - then you've obviously got, a whole range of different views and none of them, looking like the, you know, the best outcome for our party."

The minister, says however, there are a large number of people who previously voted Tory that no longer want to do so.

She says: "So what we're trying to do is make sure we get round to as many of those voters as possible."

There was 0.7% growth in the UK's GDP between January and March this year, the Office for National Statistics as said.

The ONS previously estimated the expansion was 0.6% for this period.

But it has now confirmed they previously underestimated.

These figures came on the back of a short technical recession last year - which means two quarters of contraction in GDP.

The improvement in growth was driven by the services sector, with slightly stronger activity in the professional services, transport and storage sectors.

The Conservative Party is continuing to attack Nigel Farage and Reform over comments he made about the war in Ukraine.

Mr Farage said last week that the West had provoked Russia into invading.

Speaking to the Daily Telegraph, Rishi Sunak denounced Mr Farage as "wrong".

"What he said was wrong, it was completely wrong. 

"It plays into Putin's hand. 

"This is the guy who used nerve agents on British streets, he's doing deals with North Korea. 

"That is who we're talking about here. 

"This kind of appeasement is very damaging not just for our security, but the security of our allies that depend on us and it emboldens Putin further."

The Telegraph says Mr Farage responded by saying: "Being against the Iraq and Libyan wars and predicting the Ukraine war is not appeasement. 

"I'm horrified by what Putin has done."

The Tory party has hammered this point as Reform support swells while backing for the Conservative Party recedes.

This - and saying a vote for Reform is a vote for Labour - are their two main attacks against Mr Farage.

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