outline of essay inflation

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

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AP®︎/College Macroeconomics

Course: ap®︎/college macroeconomics   >   unit 2.

• Winners and losers from inflation and deflation

Lesson summary: The costs of inflation

• The costs of inflation

Lesson overview

Key takeaways

The redistribution effect of inflation.

• Lenders are hurt by unanticipated inflation because the money they get paid back has less purchasing power than the money they loaned out.
• Borrowers benefit from unanticipated inflation because the money they pay back is worth less than the money they borrowed. Can you walk me through that? For example, suppose Jerry borrows $ 10 ‍   from Michonne and promises to pay her back $ 11 ‍   next year. This year $ 1 ‍   can buy one can of tuna, so in Jerry’s mind, he is promising to pay back 11 ‍   cans of tuna next year in exchange for the ability to buy 10 ‍   cans this year. Suppose over the course of that year there is inflation and the price of tuna doubles. This means that Jerry is paying back the value of only 5.5 ‍   cans of tuna, so he benefits from this inflation. Michonne, on the other hand, is hurt because she thought she was getting more cans of tuna in exchange for her loan.

The redistribution effects of disinflation and deflation

Common misperceptions.

• A common misperception is that inflation is bad for everyone (who likes more expensive stuff?). But this is not the case. Inflation reduces the value of money. Because of that, people who have borrowed money benefit from a higher inflation rate when they pay the money back. The interest rate that a borrower pays is effectively lower thanks to inflation.
• Another common misperception is that disinflation and deflation are good for everyone (who doesn't enjoy cheaper stuff?). The problem is, deflation increases the purchasing power of money. People who have borrowed money are paying back that loan with money that is effectively worth more than the money they borrowed. Deflation effectively increases the interest rate that a borrower pays.
• A very common misperception is that inflation should always be avoided. Deflation has such a destructive impact on an economy that most policymakers agree that avoiding deflation is a far more important objective. As a result, the goal of policymakers is not zero inflation, but small and predictable inflation rates.

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Causes of Inflation

Inflation means there is a sustained increase in the price level. The main causes of inflation are either excess aggregate demand (AD) (economic growth too fast) or cost-push factors (supply-side factors).

Summary of the main causes of inflation

• Demand-pull inflation – aggregate demand growing faster than aggregate supply (growth too rapid)
• Cost-push inflation – For example, higher oil prices feeding through into higher costs.
• Devaluation – increasing cost of imported goods, and also the boost to domestic demand.
• Rising wages – higher wages increase firms costs and increase consumers’ disposable income to spend more.
• Expectations of inflation – High inflation expectations causes workers to demand wage increases and firms to push up prices.

Video summary

Factors affecting inflation

1. demand-pull inflation.

If the economy is at or close to full employment, then an increase in aggregate demand (AD) leads to an increase in the price level (PL). As firms reach full capacity, they respond by putting up prices leading to inflation. Also, near full employment with labour shortages, workers can get higher wages which increase their spending power.

AD can increase due to an increase in any of its components C+I+G+X-M

We tend to get demand-pull inflation if economic growth is above the long-run trend rate of growth . The long-run trend rate of economic growth is the average sustainable rate of growth and is determined by the growth in productivity. Demand-pull inflation can be caused by factors such as

• Higher wages.
• Increased consumer confidence.
• Rising house prices – causing positive wealth effect.

Example of demand-pull inflation in the UK

2. Cost-push inflation

If there is an increase in the costs of firms, then businesses will pass this on to consumers. There will be a shift to the left in the SRAS.

Cost-push inflation can be caused by many factors

i) Rising wages If trades unions can present a united front then they can bargain for higher wages. Rising wages are a key cause of cost-push inflation because wages are the most significant cost for many firms. (higher wages may also contribute to rising demand) See also wage-push inflation.

ii) Import prices One-third of all goods are imported in the UK. If there is a devaluation, then import prices will become more expensive leading to an increase in inflation. A devaluation/depreciation means the Pound is worth less. Therefore we have to pay more to buy the same imported goods.

In 2011/12, the UK experienced a rise in cost-push inflation, partly due to the depreciation of the Pound against the Euro. (also due to higher taxes)

In 2022, the UK experienced more cost-push inflation due to rising oil, gas prices, Ukraine conflict, Brexit cost issues, depreciation in Pound, Covid supply constraints.

iii) Raw material prices The best example is the price of oil. If the oil price increase by 20% then this will have a significant impact on most goods in the economy and this will lead to cost-push inflation. E.g., in 1974 there was a spike in the price of oil causing a period of high inflation around the world.

4. Higher inflation expectations

Once inflation sets in, it is difficult to reduce inflation. For example, higher prices will cause workers to demand higher wages causing a wage-price spiral . Therefore, expectations of inflation are important. If people expect high inflation, it tends to be self-fulfilling. When expectations are low, temporary rise in prices tend to be short-lived and fade away.

5. Printing more money

If the Central Bank prints more money, you would expect to see a rise in inflation. This is because the money supply plays an important role in determining prices. If there is more money chasing the same amount of goods, then prices will rise. Hyperinflation is usually caused by an extreme increase in the money supply.

However, in exceptional circumstances – such as liquidity trap/recession, it is possible to increase the money supply without causing inflation. This is because, in a recession, an increase in the money supply may just be saved, e.g. banks don’t increase lending but just keep more bank reserves.

See: The link between money supply and inflation

6. Higher taxes

If the government put up taxes, such as VAT and Excise duty, this will lead to higher prices, and therefore CPI will increase. However, these tax rises are likely to be one-off increases. There is even a measure of inflation (CPI-CT) that ignores the effect of temporary tax rises/decreases.

7. Declining productivity

If firms become less productive and allow costs to rise, this invariably leads to higher prices.

8. Profit push inflation

When firms push up prices to get higher rates of inflation. This is more likely to occur during strong economic growth.

9. Monetary and fiscal policy

The attitude of the monetary authorities is important; for example, if there was an increase in AD and the monetary authorities accommodated this by increasing the money supply then there would be a rise in the price level.

• Different types of inflation
• The link between devaluation and inflation
• Why printing money causes inflation

What is inflation?

Inflation has been top of mind for many over the past few years. But how long will it persist? In June 2022, inflation in the United States jumped to 9.1 percent, reaching the highest level since February 1982. The inflation rate has since slowed in the United States , as well as in Europe , Japan , and the United Kingdom , particularly in the final months of 2023. But even though global inflation is higher than it was before the COVID-19 pandemic, when it hovered around 2 percent, it’s receding to historical levels . In fact, by late 2022, investors were predicting that long-term inflation would settle around a modest 2.5 percent. That’s a far cry from fears that long-term inflation would mimic trends of the 1970s and early 1980s—when inflation exceeded 10 percent.

Get to know and directly engage with senior McKinsey experts on inflation.

Ondrej Burkacky is a senior partner in McKinsey’s Munich office, Axel Karlsson is a senior partner in the Stockholm office, Fernando Perez is a senior partner in the Miami office, Emily Reasor is a senior partner in the Denver office, and Daniel Swan is a senior partner in the Stamford, Connecticut, office.

Inflation refers to a broad rise in the prices of goods and services across the economy over time, eroding purchasing power for both consumers and businesses. Economic theory and practice, observed for many years and across many countries, shows that long-lasting periods of inflation are caused in large part by what’s known as an easy monetary policy . In other words, when a country’s central bank sets the interest rate too low or increases money growth too rapidly, inflation goes up. As a result, your dollar (or whatever currency you use) will not go as far  today as it did yesterday. For example: in 1970, the average cup of coffee in the United States cost 25 cents; by 2019, it had climbed to $1.59. So for $5, you would have been able to buy about three cups of coffee in 2019, versus 20 cups in 1970. That’s inflation, and it isn’t limited to price spikes for any single item or service; it refers to increases in prices across a sector, such as retail or automotive—and, ultimately, a country’s economy.

How does inflation affect your daily life? You’ve probably seen high rates of inflation reflected in your bills—from groceries to utilities to even higher mortgage payments. Executives and corporate leaders have had to reckon with the effects of inflation too, figuring out how to protect margins while paying more for raw materials.

But inflation isn’t all bad. In a healthy economy, annual inflation is typically in the range of two percentage points, which is what economists consider a sign of pricing stability. When inflation is in this range, it can have positive effects: it can stimulate spending and thus spur demand and productivity when the economy is slowing down and needs a boost. But when inflation begins to surpass wage growth, it can be a warning sign of a struggling economy.

Introducing McKinsey Explainers : Direct answers to complex questions

Inflation may be declining in many markets, but there’s still uncertainty ahead: without a significant surge in productivity, Western economies may be headed for a period of sustained inflation or major economic reset , as Japan has experienced in the first decades of the 21st century.

What does seem to be changing are leaders’ attitudes. According to the 2023 year-end McKinsey Global Survey on economic conditions , respondents reported less fear about inflation as a risk to global and domestic economic growth . But this sentiment varies significantly by region: European respondents were most concerned about the effects of inflation, whereas respondents in North America offered brighter views.

What causes inflation?

Monetary policy is a critical driver of inflation over the long term. The current high rate of inflation is a result of increased money supply , high raw materials costs , labor mismatches , and supply disruptions —exacerbated by geopolitical conflict .

In general, there are two primary types, or causes, of short-term inflation:

• Demand-pull inflation occurs when the demand for goods and services in the economy exceeds the economy’s ability to produce them. For example, when demand for new cars recovered more quickly than anticipated from its sharp dip at the beginning of the COVID-19 pandemic, an intervening shortage  in the supply of semiconductors  made it hard for the automotive industry to keep up with this renewed demand. The subsequent shortage of new vehicles resulted in a spike in prices for new and used cars.
• Cost-push inflation occurs when the rising price of input goods and services increases the price of final goods and services. For example, commodity prices spiked sharply  during the pandemic as a result of radical shifts in demand, buying patterns, cost to serve, and perceived value across sectors and value chains. To offset inflation and minimize impact on financial performance, industrial companies were forced to increase prices for end consumers.

Learn more about McKinsey’s Growth, Marketing & Sales  Practice.

What are some periods in history with high inflation?

Economists frequently compare the current inflationary period with the post–World War II era , when price controls, supply problems, and extraordinary demand in the United States fueled double-digit inflation gains—peaking at 20 percent in 1947—before subsiding at the end of the decade. Consumption patterns today have been similarly distorted, and supply chains have been disrupted  by the pandemic.

The period from the mid-1960s through the early 1980s in the United States, sometimes called the “Great Inflation,” saw some of the country’s highest rates of inflation, with a peak of 14.8 percent in 1980. To combat this inflation, the Federal Reserve raised interest rates to nearly 20 percent. Some economists attribute this episode partially to monetary policy mistakes rather than to other causes, such as high oil prices. The Great Inflation signaled the need for public trust  in the Federal Reserve’s ability to lessen inflationary pressures.

Inflation isn’t solely a modern-day phenomenon, of course. One very early example of inflation comes from Roman times, from around 200 to 300 CE. Roman leaders were struggling to fund an army big enough to deal with attackers from multiple fronts. To help, they watered down  the silver in their coinage, causing the value of money to slowly fall—and inflation to pick up. This led merchants to raise their prices, causing widespread panic. In response, the emperor Diocletian issued what’s now known as the Edict on Maximum Prices, a series of price and wage controls designed to stop the rise of prices and wages (one helpful control was a maximum price for a male lion). But because the edict didn’t address the root cause of inflation—the impure silver coin—it didn’t fix the problem.

How is inflation measured?

Statistical agencies measure inflation first by determining the current value of a “basket” of various goods and services consumed by households, referred to as a price index. To calculate the rate of inflation over time, statisticians compare the value of the index over one period with that of another. Comparing one month with another gives a monthly rate of inflation, and comparing from year to year gives an annual rate of inflation.

In the United States, the Bureau of Labor Statistics publishes its Consumer Price Index (CPI), which measures the cost of items that urban consumers buy out of pocket. The CPI is broken down by region and is reported for the country as a whole. The Personal Consumption Expenditures (PCE) price index —published by the US Bureau of Economic Analysis—takes into account a broader range of consumer spending, including on healthcare. It is also weighted by data acquired through business surveys.

How does inflation affect consumers and companies differently?

Inflation affects consumers most directly, but businesses can also feel the impact:

• Consumers lose purchasing power when the prices of items they buy, such as food, utilities, and gasoline, increase. This can lead to household belt-tightening and growing pessimism about the economy .
• Companies lose purchasing power and risk seeing their margins decline , when prices increase for inputs used in production. These can include raw materials like coal and crude oil , intermediate products such as flour and steel, and finished machinery. In response, companies typically raise the prices of their products or services to offset inflation, meaning consumers absorb these price increases. The challenge for many companies is to strike the right balance between raising prices to cover input cost increases while simultaneously ensuring that they don’t raise prices so much that they suppress demand.

How can organizations respond to high inflation?

During periods of high inflation, companies typically pay more for materials , which decreases their margins. One way for companies to offset losses and maintain margins is by raising prices for consumers. However, if price increases are not executed thoughtfully, companies can damage customer relationships and depress sales —ultimately eroding the profits they were trying to protect.

When done successfully, recovering the cost of inflation for a given product can strengthen relationships and overall margins. There are five steps companies can take to ADAPT  (adjust, develop, accelerate, plan, and track) to inflation:

• Adjust discounting and promotions and maximize nonprice levers. This can include lengthening production schedules or adding surcharges and delivery fees for rush or low-volume orders.
• Develop the art and science of price change. Instead of making across-the-board price changes, tailor pricing actions to account for inflation exposure, customer willingness to pay, and product attributes.
• Accelerate decision making tenfold. Establish an “inflation council” that includes dedicated cross-functional, inflation-focused decision makers who can act quickly and nimbly on customer feedback.
• Plan options beyond pricing to reduce costs. Use “value engineering” to reimagine a portfolio and provide cost-reducing alternatives to price increases.
• Track execution relentlessly. Create a central supporting team to address revenue leakage and to manage performance rigorously. Traditional performance metrics can be less reliable when inflation is high .

Beyond pricing, a variety of commercial and technical levers can help companies deal with price increases in an inflationary market , but other sectors may require a more tailored response to pricing.

Learn more about our Financial Services , Industrials & Electronics , Operations , Strategy & Corporate Finance , and  Growth, Marketing & Sales Practices.

How can CEOs help protect their organizations against uncertainty during periods of high inflation?

In today’s uncertain environment, in which organizations have a much wider range of stakeholders, leaders must think about performance beyond short-term profitability. CEOs should lead with the complete business cycle and their complete slate of stakeholders in mind.

CEOs need an inflation management playbook , just as central bankers do. Here are some important areas to keep in mind while scripting it:

• Design. Leaders should motivate their organizations to raise the profile of design  to a C-suite topic. Design choices for products and services are critical for responding to price volatility, scarcity of components, and higher production and servicing costs.
• Supply chain. The most difficult task for CEOs may be convincing investors to accept supply chain resiliency as the new table stakes. Given geopolitical and economic realities, supply chain resiliency has become a crucial goal for supply chain leaders, alongside cost optimization.
• Procurement. CEOs who empower their procurement  organizations can raise the bar on value-creating contributions. Procurement leaders have told us time and again that the current market environment is the toughest they’ve experienced in decades. CEOs are beginning to recognize that purchasing leaders can be strategic partners by expanding their focus beyond cost cutting to value creation.
• Feedback. A CEO can take a lead role in playing back the feedback the organization is hearing. In today’s tight labor market, CEOs should guide their companies to take a new approach to talent, focusing on compensation, cultural factors, and psychological safety .
• Pricing. Forging new pricing relationships with customers will test CEOs in their role as the “ultimate integrator.” Repricing during inflationary times is typically unpleasant for companies and customers alike. With setting new prices, CEOs have the opportunity to forge deeper relationships with customers, by turning to promotions, personalization , and refreshed communications around value.
• Agility. CEOs can strive to achieve a focus based more on strategic action and less on firefighting. Managing the implications of inflation calls for a cross-functional, disciplined, and agile response.

A practical example: How is inflation affecting the US healthcare industry?

Consumer prices for healthcare have rarely risen faster than the rate of inflation—but that’s what’s happening today. The impact of inflation on the broader economy has caused healthcare costs to rise faster than the rate of inflation. Experts also expect continued labor shortages in healthcare—gaps of up to 450,000 registered nurses and 80,000 doctors —even as demand for services continues to rise. This drives up consumer prices and means that higher inflation could persist. McKinsey analysis as of 2022 predicted that the annual US health expenditure is likely to be $370 billion higher by 2027 because of inflation.

This climate of risk could spur healthcare leaders to address productivity, using tech levers to boost productivity while also reducing costs. In order to weather the storm, leaders will need to quickly set high aspirations, align their organizations around them, and execute with speed .

What is deflation?

If inflation is one extreme of the pricing spectrum, deflation is the other. Deflation occurs when the overall level of prices in an economy declines and the purchasing power of currency increases. It can be driven by growth in productivity and the abundance of goods and services, by a decrease in demand, or by a decline in the supply of money and credit.

Generally, moderate deflation positively affects consumers’ pocketbooks, as they can purchase more with less money. However, deflation can be a sign of a weakening economy, leading to recessions and depressions. While inflation reduces purchasing power, it also reduces the value of debt. During a period of deflation, on the other hand, debt becomes more expensive. And for consumers, investments such as stocks, corporate bonds, and real estate become riskier.

A recent period of deflation in the United States was the Great Recession, between 2007 and 2008. In December 2008, more than half of executives surveyed by McKinsey  expected deflation in their countries, and 44 percent expected to decrease the size of their workforces.

When taken to their extremes, both inflation and deflation can have significant negative effects on consumers, businesses, and investors.

For more in-depth exploration of these topics, see McKinsey’s Operations Insights  collection. Learn more about Operations consulting , and check out operations-related job opportunities  if you’re interested in working at McKinsey.

Articles referenced:

• “ Investing in productivity growth ,” March 27, 2024, Jan Mischke , Chris Bradley , Marc Canal, Olivia White , Sven Smit , and Denitsa Georgieva
• “ Economic conditions outlook during turbulent times, December 2023 ,” December 20, 2023
• “ Forward Thinking on why we ignore inflation—from ancient times to the present—at our peril with Stephen King ,” November 1, 2023
• “ Procurement 2023: Ten CPO actions to defy the toughest challenges ,” March 6, 2023, Roman Belotserkovskiy , Carolina Mazuera, Marta Mussacaleca , Marc Sommerer, and Jan Vandaele
• “ Why you can’t tread water when inflation is persistently high ,” February 2, 2023, Marc Goedhart and Rosen Kotsev
• “ Markets versus textbooks: Calculating today’s cost of equity ,” January 24, 2023, Vartika Gupta, David Kohn, Tim Koller , and Werner Rehm  
• “ Inflation-weary Americans are increasingly pessimistic about the economy ,” December 13, 2022, Gonzalo Charro, Andre Dua , Kweilin Ellingrud , Ryan Luby, and Sarah Pemberton
• “ Inflation fighter and value creator: Procurement’s best-kept secret ,” October 31, 2022, Roman Belotserkovskiy , Ezra Greenberg , Daphne Luchtenberg, and Marta Mussacaleca
• “ Prime Numbers: Rethink performance metrics when inflation is high ,” October 28, 2022, Vartika Gupta, David Kohn, Tim Koller , and Werner Rehm
• “ The gathering storm: The threat to employee healthcare benefits ,” October 20, 2022, Aditya Gupta , Akshay Kapur , Monisha Machado-Pereira , and Shubham Singhal
• “ Utility procurement: Ready to meet new market challenges ,” October 7, 2022, Roman Belotserkovskiy , Abhay Prasanna, and Anton Stetsenko
• “ The gathering storm: The transformative impact of inflation on the healthcare sector ,” September 19, 2022, Addie Fleron, Aneesh Krishna , and Shubham Singhal
• “ Pricing during inflation: Active management can preserve sustainable value ,” August 19, 2022, Niels Adler and Nicolas Magnette
• “ Navigating inflation: A new playbook for CEOs ,” April 14, 2022, Asutosh Padhi , Sven Smit , Ezra Greenberg , and Roman Belotserkovskiy
• “ How business operations can respond to price increases: A CEO guide ,” March 11, 2022, Andreas Behrendt ,  Axel Karlsson , Tarek Kasah, and  Daniel Swan
• “ Five ways to ADAPT pricing to inflation ,” February 25, 2022,  Alex Abdelnour , Eric Bykowsky, Jesse Nading,  Emily Reasor , and Ankit Sood
• “ How COVID-19 is reshaping supply chains ,” November 23, 2021,  Knut Alicke ,  Ed Barriball , and Vera Trautwein
• “ Navigating the labor mismatch in US logistics and supply chains ,” December 10, 2021,  Dilip Bhattacharjee , Felipe Bustamante, Andrew Curley, and  Fernando Perez
• “ Coping with the auto-semiconductor shortage: Strategies for success ,” May 27, 2021,  Ondrej Burkacky , Stephanie Lingemann, and Klaus Pototzky

This article was updated in April 2024; it was originally published in August 2022.

Want to know more about inflation?

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Essay on Inflation

Essay generator.

Inflation is a term that resonates through the corridors of our daily lives, affecting decisions made by individuals, businesses, and governments alike. It refers to the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. Central banks attempt to limit inflation, and avoid deflation, to keep the economy running smoothly. This essay delves into the causes of inflation, its various effects on the economy and individuals, and the strategies employed to manage it, aiming to provide a comprehensive understanding suitable for a student participating in an essay writing competition.

The Causes of Inflation

Inflation is primarily caused by two factors: demand-pull and cost-push inflation. Demand-pull inflation occurs when demand for goods and services exceeds supply, causing prices to rise. This can happen due to increased consumer spending, government expenditure, or investment. Cost-push inflation, on the other hand, happens when the cost of production increases, leading producers to raise prices to maintain their profit margins. This increase in production costs can be due to rising wages, increased taxes, or higher prices for raw materials.

• Demand-pull inflation occurs when the overall demand for goods and services in an economy exceeds its supply. This excess demand leads to rising prices as businesses raise prices to capitalize on increased consumer demand.
• Factors contributing to demand-pull inflation include robust consumer spending, increased government spending, low-interest rates, and high levels of investment.
• Cost-push inflation is driven by rising production costs, which are then passed on to consumers in the form of higher prices. These rising costs can result from various factors, such as increased wages, higher energy prices, or supply chain disruptions.
• For example, if oil prices spike, it can lead to increased transportation costs, which may cause businesses to raise prices on their products.
• Built-in inflation, also known as the wage-price spiral, occurs when workers demand higher wages to keep up with rising prices. When businesses pay higher wages, they often pass those costs on to consumers, causing prices to rise further. This cycle can continue, perpetuating inflation.
• Expectations of future inflation can also contribute to built-in inflation, as people adjust their behavior and spending patterns in anticipation of rising prices.
• The policies of central banks, such as the Federal Reserve in the United States, can influence inflation. When central banks implement loose monetary policies, such as low-interest rates and quantitative easing, it can increase the money supply and potentially lead to demand-pull inflation.
• Central banks can also use tight monetary policies, such as raising interest rates, to combat inflation and reduce spending.
• Government fiscal policies, including changes in taxation and government spending, can affect inflation. An increase in government spending without corresponding revenue sources can stimulate demand and contribute to inflation.
• Tax cuts can also increase disposable income, leading to higher consumer spending and potential demand-pull inflation.
• Exchange rate fluctuations can impact inflation by influencing the prices of imported goods. A depreciating domestic currency can make imports more expensive, contributing to cost-push inflation.
• Conversely, a strengthening currency can lower import prices and help reduce inflation.
• Unforeseen events, such as natural disasters, geopolitical tensions, or disruptions in the supply chain, can cause sudden supply shortages or surpluses. These shocks can result in sharp price movements and contribute to inflation.
• For instance, a severe drought can reduce agricultural output, leading to higher food prices.
• Global economic conditions and trends, such as changes in international commodity prices or global economic growth, can influence inflation in individual countries.
• Economic policies in major trading partners can also have spill-over effects on domestic inflation.

The Effects of Inflation

Inflation impacts various facets of the economy and society. Moderate inflation is a sign of a growing economy, but high inflation can have detrimental effects.

Economic Effects

1. Reduced Purchasing Power: Inflation erodes the purchasing power of money, meaning consumers can buy less with the same amount of money. This reduction can impact living standards and consumer spending.

2. Income Redistribution: Inflation can act as a regressive tax, hitting harder on low-income families. Fixed-income recipients, such as pensioners, find their incomes do not stretch as far, while borrowers may benefit from repaying loans with money that is worth less.

3. Investment Uncertainty: High inflation can lead to uncertainty in the investment market. Investors become wary of long-term investments due to the unpredictability of future costs and returns.

Social Effects

1. Cost of Living: As the cost of goods and services increases, individuals may struggle to afford basic necessities, leading to a lower quality of life.

2. Wage-Price Spiral: Continuous inflation can lead to a wage-price spiral, where workers demand higher wages to keep up with rising prices, which in turn causes prices to rise further.

3. Access to Education and Healthcare: Rising costs can make education and healthcare less accessible to the general population, affecting long-term social and economic development.

Managing Inflation

Governments and central banks use various tools to manage inflation, aiming to maintain it at a level that promotes economic stability and growth.

Monetary Policy

The most common tool for managing inflation is monetary policy, which involves regulating the money supply and interest rates. Central banks can increase interest rates to reduce spending and borrowing, thereby slowing down the economy and reducing inflation. Conversely, lowering interest rates can stimulate spending and investment, increasing demand and potentially causing inflation.

Fiscal Policy

Governments can also use fiscal policy to control inflation by adjusting spending and taxation. Reducing government spending or increasing taxes can decrease the overall demand in the economy, lowering inflation. However, these measures can be unpopular politically as they may lead to reduced public services and higher taxes.

Supply-Side Policies

Improving efficiency and increasing supply can also combat inflation. This can be achieved through investment in technology, deregulation, and policies aimed at increasing productivity. By increasing the supply of goods and services, prices can stabilize or even decrease.

In conclusion, Inflation is a complex phenomenon with wide-ranging effects on the economy and society. Understanding its causes and impacts is crucial for effective management and policy-making. While moderate inflation is a sign of a healthy economy, unchecked inflation can lead to significant economic and social challenges. Through a combination of monetary, fiscal, and supply-side policies, governments and central banks strive to balance inflation to ensure economic stability and growth. As students delve into the intricacies of inflation, they gain insight into the delicate balance required to manage an economy, preparing them for informed citizenship and, possibly, roles in shaping economic policy in the future.

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Essay Writing Guide

Writing An Essay Outline

Learn How to Create a Perfect Essay Outline

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Writing essays can be a daunting task for many students, causing stress and anxiety.

The pressure to produce clear, well-structured, and coherent essays often leaves students overwhelmed, especially when they lack effective strategies.

The essay outline plays a critical role in shaping the entire content of the essay.

In this easy-to-follow guide, we'll break down essay outlining step by step so you can write with confidence and get better grades. 

Say goodbye to writer's block with our provided templates for different types of essays !

Let's make essay writing a breeze!

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• 1. What is an Essay Outline? 
• 2. How to Write an Essay Outline in 4 Steps?  
• 3. Key Parts of An Essay Outline 
• 4. Essay Outline Format 
• 5. Different Essay Outline Templates
• 6. Essay Outline Examples

What is an Essay Outline? 

An essay outline is a short plan of your essay where you list down all the ideas you need to cover in your essay. 

Planning your ideas and arguments before you start essay writing will help you to ensure that you cover all the important points.

An essay outline typically includes:

• Introduction: This is where you introduce your topic and provide some context. 
• Body Paragraphs: Each paragraph focuses on one idea or point related to your topic.
• Conclusion: Here, you summarize everything you've talked about and leave your reader with some final thoughts.

Once you create the outline, you won't miss any important information. It also helps you in:

• Organizing your thoughts and ideas.
• Understanding how the information flows.
• Not skipping any crucial information or references.
• Finishing your work more quickly.

How to Write an Essay Outline in 4 Steps?  

Writing an essay outline is like creating a roadmap for your essay. It helps you stay organized and ensures your essay flows smoothly. 

Here are four straightforward steps to get you started:

Step 1: Choose Your Topic

Before you begin outlining, you need a clear understanding of your essay's topic . 

Select a topic that interests you and aligns with your assignment's requirements. Once you have your topic, you're ready to move on.

Step 2: Identify the Main Points

Think about the key ideas or arguments you want to present in your essay. These will become the main points or sections of your outline. 

Jot them down in a logical order.

Step 3: Add Subpoints

Under each main point, add subpoints that support and expand upon your main ideas. These subpoints can be examples, evidence, or specific details related to your main points.

Step 4: Organize and Structure

Now, arrange your main points and subpoints in a logical order. Typically, essays follow a three-part structure: Introduction, Body Paragraphs, and Conclusion. 

Your outline should reflect this structure, with each main point corresponding to a section of your essay.

Key Parts of An Essay Outline 

Crafting a well-structured essay begins with a solid outline. 

Understanding its key components is your first step toward essay-writing success. It will include the following elements:

Introduction

An essay introduction contains:

• Hook: An engaging opening sentence or two that captures the reader's attention.
• Thesis Statement : A clear and concise statement that presents the main argument or purpose of the essay.

Body Paragraphs

A body paragraph of an essay consists of:

• Topic Sentence : The main idea of the paragraph, usually the first sentence.
• Supporting Details: Evidence, examples, facts, or quotations that support the topic sentence.
• Analysis: Your interpretation and analysis of the supporting details, explaining how they relate to the thesis.
• Transition Words and Sentences: Words and Sentences that connect one paragraph to the next and maintain the flow of the essay.

An essay conclusion summarizes the main points consisting of:

• Restate Thesis: Restate the thesis statement, but in different words.
• Summarize Main Points: Briefly summarize the key points from the body paragraphs.
• Closing Statement: Provide a closing thought or reflection that leaves a lasting impression on the reader.

Essay Outline Format 

There's no one-size-fits-all approach, and that's why we'll explore various types of essay outlines to suit different essay formats and purposes.

General Essay Outline 

The general essay outline structure uses the linear style.

All the points are numbered in order of their importance, from major to minor roles. In order to rank, assign numbers to your ideas. 

Here’s a general essay template for all essays that you can refer to structure your main ideas. 

Alphanumeric Essay Outline 

For most papers, it is always advisable to choose an alphanumeric outline format. 

In an alphanumeric structure, major sections are shown in Roman numbers, then comes the capital letters, numbers, and lowercase letters. 

Decimal Essay Outline 

You can also use the decimal essay outline format. It is a less common way of outlining an essay or a paper.

Different Essay Outline Templates

Different templates can help you get a better idea of essay outlining. Here are some essay outline examples for you to get a general idea for writing your outlines. 

Informative Essay Outline

An  informative essay  writing is all about conveying information or educating readers about a particular topic.

Below, you can find what an outline for an informative essay should consist of.

Narrative Essay Outline

A  narrative essay  is a type of paper in which you tell a story from your own perspective or personal experience. It provides specific details to get the readers involved in your story and understand your viewpoint.

Below is the  narrative essay outline that you can refer to for better understanding.

Argumentative Essay Outline

An  argumentative essay  is quite similar to a comparative essay in terms of developing arguments to support the claim. In this type of essay writing, you should provide solid arguments on both sides of the issue.

To achieve that, follow an  argumentative essay outline  to compose a great argumentative paper and score high grades.

The following is the argumentative essay outline template for your help.

Persuasive Essay Outline

In a  persuasive essay , the author uses logic and solid arguments to convince the readers of a particular point of view.

To create an outline for a persuasive essay , consider the following template.

Analytical Essay Outline

An analytical essay is usually written to analyze a text. It concentrates on how something is done. Writing an  analytical essay  involves breaking down the concept into parts to understand its meaning and what message it conveys.

Below is what the  outline for an analytical essay  should look like.

Descriptive Essay Outline

A descriptive essay is a type of paper in which the writer describes an object, person, process, or event. The main goal of writing a  descriptive essay  is to create a vivid picture in the reader’s mind.

Following is a perfect descriptive essay outline  that you can follow for a well-structured descriptive paper.

Compare And Contrast Essay Outline

A compare and contrast essay highlights the way in which two things are different and similar to each other. 

Below, you can find the outline for compare and contrast essay .

Rhetorical Analysis Essay Outline

A  rhetorical analysis essay  analyzes a piece of work in terms of rhetoric.

The rhetorical analysis essay outline will help you examine the work and explain how its different parts come together.

Expository Essay Outline

An expository essay presents a balanced analysis of a subject solely based on facts. 

The expository essay outline gives you a better idea of creating a well-written outline for your essay. 

Synthesis Essay Outline

A  synthesis essay involves taking a unique viewpoint of a central idea and backing it up with different sources. 

Need to submit a synthesis essay soon? Here is a  synthesis essay outline  template to specify all the main points first.

Literary Analysis Essay Outline

A  literary analysis essay?  is an important academic assignment that examines and evaluates a piece of literature work.

If you have no idea how to structure this type of essay, here is a  literary analysis essay outline  for your help.

Reflective Essay Outline

In a  reflective essay , you write about your own experience or thoughts regarding a specific topic. 

Get to know about this type of essay from the following  reflective essay outline .

Cause and Effect Essay Outline

A cause and effect essay identifies the reasons for something and then discusses the results. 

The following  cause and effect essay outline  can help students understand and get into the writing process.

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Scholarship Essay Outline

A  scholarship essay  is an important part of the scholarship application process. This essay helps students to stand out and get the scholarship.

Here is an outline to help you understand how scholarship essays are different from other essay types.

Problem Solution Essay Outline

A  problem-solution essay  identifies a problem and provides one or more solutions to it. It usually consists of three parts: introduction, body paragraph, and conclusion.

Learn more about the structure of a problem-solution essay with this outline.

Evaluation Essay Outline

The purpose of writing an evaluation essay is to judge a particular topic according to certain criteria.

In order to write a perfect evaluation essay, refer to the following outline.

Definition Essay Outline

A  definition essay  explores a certain term and provides personal understanding of the term. This essay is more than a dictionary definition.

You can also check out the following definition essay outline for more help.

Essay Outline Examples

The essay outline can be a great way to organize your thoughts when writing an essay. The following examples are for the help that gives you an idea of creating a perfect outline.

Here are some more examples for your better understanding:

Essay Outline Sample

5-Paragraph Essay Outline

Essay Outline On Democracy

College Essay Outline Template

Research Essay Outline

Throughout this guide, we've explored the crucial role of essay outlines along with different formats and templates of outlines.

However, we understand that even with the best guidance, crafting an essay can be a daunting task. That's where MyPerfectWords.com comes in. 

Our essay writing help  is here to offer expert assistance and deliver impeccable essays tailored to your needs.

So, why wait? Get 24/7 assistance now!

Frequently Asked Questions

What are the 3 types of outlines.

Besides the alphanumeric and decimal essay outlines, the following are the 3 types of outlines.

• Working outline
• Full-sentence outline
• Speaking outline

All of these are used for different purposes so be careful that you choose the right type of outline.

What is a topic outline?

A topic outline is a useful tool for organizing your thoughts while developing an argument and structuring the paper.

It helps in outlining the main ideas and arguments and presenting them in a coherent way. It also assists in building relationships between the entire assignment.

What is a full sentence outline?

The full sentence outline is a more detailed and structured way to create an essay. They are the same as the alphanumeric outlines.

These outlines use complete sentences at each level of the structure. This type of format can be used for any formal writing assignment where you need to provide detail about your thoughts.

It helps to write well-supported arguments or develop concrete ideas with evidence and outside sources.

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Essays on Inflation

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Inflation tax is the financial loss of value incurred by a holder of cash. For example, if you hold a $1000 bill for one year, then it will purchase on what $980 would have bought a year ago. Inasmuch as excess bank reserves attract nominal interest, the value is still...

Inflation and Its Causes Inflation has been as a result of rapid increase in the quantity of money or general supply of money in the economy. Inflation has occurred in several different countries. By the nineteenth period, the economist has been able to separate various factors which cause increase or fall...

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Money plays a significant role in the economy. The purposes of money include as medium of exchange where money is used in exchange for goods and services. Money is also used as measures of value where it acts as a common denominator permitting every good or service to be priced...

Deflation and its Positive Effects Deflation is both a negative and a positive thing. Some of the positive effects of deflation include the fact that it reduces the burden of private and private debt. It also enables banks to adjust and control the interest rates of a product to stabilize the...

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• How to write an essay outline | Guidelines & examples

How to Write an Essay Outline | Guidelines & Examples

Published on August 14, 2020 by Jack Caulfield . Revised on July 23, 2023.

An essay outline is a way of planning the structure of your essay before you start writing. It involves writing quick summary sentences or phrases for every point you will cover in each paragraph , giving you a picture of how your argument will unfold.

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Table of contents

Organizing your material, presentation of the outline, examples of essay outlines, other interesting articles, frequently asked questions about essay outlines.

At the stage where you’re writing an essay outline, your ideas are probably still not fully formed. You should know your topic  and have already done some preliminary research to find relevant sources , but now you need to shape your ideas into a structured argument.

Creating categories

Look over any information, quotes and ideas you’ve noted down from your research and consider the central point you want to make in the essay—this will be the basis of your thesis statement . Once you have an idea of your overall argument, you can begin to organize your material in a way that serves that argument.

Try to arrange your material into categories related to different aspects of your argument. If you’re writing about a literary text, you might group your ideas into themes; in a history essay, it might be several key trends or turning points from the period you’re discussing.

Three main themes or subjects is a common structure for essays. Depending on the length of the essay, you could split the themes into three body paragraphs, or three longer sections with several paragraphs covering each theme.

As you create the outline, look critically at your categories and points: Are any of them irrelevant or redundant? Make sure every topic you cover is clearly related to your thesis statement.

Order of information

When you have your material organized into several categories, consider what order they should appear in.

Your essay will always begin and end with an introduction and conclusion , but the organization of the body is up to you.

Consider these questions to order your material:

• Is there an obvious starting point for your argument?
• Is there one subject that provides an easy transition into another?
• Do some points need to be set up by discussing other points first?

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Within each paragraph, you’ll discuss a single idea related to your overall topic or argument, using several points of evidence or analysis to do so.

In your outline, you present these points as a few short numbered sentences or phrases.They can be split into sub-points when more detail is needed.

The template below shows how you might structure an outline for a five-paragraph essay.

• Thesis statement
• First piece of evidence
• Second piece of evidence
• Summary/synthesis
• Importance of topic
• Strong closing statement

You can choose whether to write your outline in full sentences or short phrases. Be consistent in your choice; don’t randomly write some points as full sentences and others as short phrases.

Examples of outlines for different types of essays are presented below: an argumentative, expository, and literary analysis essay.

Argumentative essay outline

This outline is for a short argumentative essay evaluating the internet’s impact on education. It uses short phrases to summarize each point.

Its body is split into three paragraphs, each presenting arguments about a different aspect of the internet’s effects on education.

• Importance of the internet
• Concerns about internet use
• Thesis statement: Internet use a net positive
• Data exploring this effect
• Analysis indicating it is overstated
• Students’ reading levels over time
• Why this data is questionable
• Video media
• Interactive media
• Speed and simplicity of online research
• Questions about reliability (transitioning into next topic)
• Evidence indicating its ubiquity
• Claims that it discourages engagement with academic writing
• Evidence that Wikipedia warns students not to cite it
• Argument that it introduces students to citation
• Summary of key points
• Value of digital education for students
• Need for optimism to embrace advantages of the internet

Expository essay outline

This is the outline for an expository essay describing how the invention of the printing press affected life and politics in Europe.

The paragraphs are still summarized in short phrases here, but individual points are described with full sentences.

• Claim that the printing press marks the end of the Middle Ages.
• Provide background on the low levels of literacy before the printing press.
• Present the thesis statement: The invention of the printing press increased circulation of information in Europe, paving the way for the Reformation.
• Discuss the very high levels of illiteracy in medieval Europe.
• Describe how literacy and thus knowledge and education were mainly the domain of religious and political elites.
• Indicate how this discouraged political and religious change.
• Describe the invention of the printing press in 1440 by Johannes Gutenberg.
• Show the implications of the new technology for book production.
• Describe the rapid spread of the technology and the printing of the Gutenberg Bible.
• Link to the Reformation.
• Discuss the trend for translating the Bible into vernacular languages during the years following the printing press’s invention.
• Describe Luther’s own translation of the Bible during the Reformation.
• Sketch out the large-scale effects the Reformation would have on religion and politics.
• Summarize the history described.
• Stress the significance of the printing press to the events of this period.

Literary analysis essay outline

The literary analysis essay outlined below discusses the role of theater in Jane Austen’s novel Mansfield Park .

The body of the essay is divided into three different themes, each of which is explored through examples from the book.

• Describe the theatricality of Austen’s works
• Outline the role theater plays in Mansfield Park
• Introduce the research question : How does Austen use theater to express the characters’ morality in Mansfield Park ?
• Discuss Austen’s depiction of the performance at the end of the first volume
• Discuss how Sir Bertram reacts to the acting scheme
• Introduce Austen’s use of stage direction–like details during dialogue
• Explore how these are deployed to show the characters’ self-absorption
• Discuss Austen’s description of Maria and Julia’s relationship as polite but affectionless
• Compare Mrs. Norris’s self-conceit as charitable despite her idleness
• Summarize the three themes: The acting scheme, stage directions, and the performance of morals
• Answer the research question
• Indicate areas for further study

If you want to know more about AI tools , college essays , or fallacies make sure to check out some of our other articles with explanations and examples or go directly to our tools!

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You will sometimes be asked to hand in an essay outline before you start writing your essay . Your supervisor wants to see that you have a clear idea of your structure so that writing will go smoothly.

Even when you do not have to hand it in, writing an essay outline is an important part of the writing process . It’s a good idea to write one (as informally as you like) to clarify your structure for yourself whenever you are working on an essay.

If you have to hand in your essay outline , you may be given specific guidelines stating whether you have to use full sentences. If you’re not sure, ask your supervisor.

When writing an essay outline for yourself, the choice is yours. Some students find it helpful to write out their ideas in full sentences, while others prefer to summarize them in short phrases.

You should try to follow your outline as you write your essay . However, if your ideas change or it becomes clear that your structure could be better, it’s okay to depart from your essay outline . Just make sure you know why you’re doing so.

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How to Write an Essay Outline + Essay Outline Examples

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How to Write an Essay Outline + Essay Outline Examples 

Writing an essay can seem like a daunting task, but one of the best ways to tackle this challenge is to organize your ideas into a well-structured essay outline. This guide will walk you through the process of creating an essay outline, complete with essay outline examples, to ensure your next essay is a masterpiece.

We’ve compiled a variety of essay outline examples to help you understand how to structure your own essay. We'll cover persuasive essays, narrative essays, descriptive essays, expository essays, and even provide a sample research paper outline. Each example will provide you with an idea of how to lay out the structure and details for each type of essay.

Looking for a printable list of essay outline examples? Our printable PDF features essay outline examples and templates that your students can use as examples when writing research papers, or as a supplement for an essay-writing unit

Why write an essay outline? 

An outline serves as the skeleton of your essay, giving you a clear and organized path to articulate your thoughts. Not only does it make writing an essay significantly easier, but it also allows you to present your arguments coherently and effectively.

An essay outline will help you organize your main ideas and determine the order in which you are going to write about them.

Types of essay outlines

Several types of essay outlines can be used when writing an essay. The two most common types are the alphanumeric outline and the decimal outline.

An alphanumeric outline typically uses Roman numerals, capital letters, Arabic numerals, and lowercase letters, in that order. Each level provides a different level of specificity. This structure is a very effective way to think through how you will organize and present the information in your essay. It also helps you develop a strong argumentative essay.

Alternatively, a decimal outline uses only numbers, and each subsection is a decimal subdivision of the main section. This type of outline is often used in scientific papers.

Persuasive essay outline example 

In the following section, we'll explore a persuasive essay outline example on competitive swimming. The purpose of a persuasive essay is to convince the reader of a particular point of view or idea, using compelling arguments and evidence.

In this case, the argument is that competitive swimming is an ideal sport for kids. The essay will present a series of arguments to support this view, demonstrating the various benefits of competitive swimming for children.

Competitive Swimming, an Ideal Sport for Kids

Introduction

Start your argumentative essay outline by stating your point of view and/or presenting your persuasive argument.

Thesis: Competitive swimming is a great alternative to other youth sports.

Body Paragraph 1

Introduce your primary persuasive argument and provide supporting details in your argumentative essay outline.

Topic Sentence:   Competitive swimming provides the same benefits as other sports.

• Detail Sentence 1:   It is good exercise and builds muscular strength.
• Detail Sentence 2:   It promotes cooperation among team members, especially in relays.

Body Paragraph 2

Introduce a secondary argument and provide supporting details.

Topic Sentence:   Competitive swimming provides some unique additional benefits.

• Detail Sentence 1:   Swimming is an important skill that can be used forever.
• Detail Sentence 2:  Swimming poses a reduced risk of injury.
• Detail Sentence 3:   Each swimmer can easily chart his or her own progress.

Conclude your essay writing with a summary of the thesis and persuasive arguments. Brainstorming details that support your point-of-view is a great way to start before creating your outline and first draft.

Concluding Sentence:   There are many reasons why competitive swimming is a great alternative to other youth sports, including...

Narrative essay outline example

In the following section, we will examine a narrative essay outline example titled "How Losing a Swim Meet Made Me a Better Swimmer." Narrative essays aim to tell a story, often about a personal experience, to engage the reader and convey a particular point or lesson.

In this case, the narrative revolves around the author's personal journey of improvement and self-discovery through swimming. The essay will illustrate how an initial setback served as a catalyst for significant improvement and personal growth.

How Losing a Swim Meet Made Me a Better Swimmer

Introduce the subject of your narrative essay using a thesis statement and a plan of development (POD).

Thesis: The first time I participated in a competitive swim meet, I finished in last place. With more focused training and coaching, I was able to finish 2nd in the State Championship meet.

Plan of development:   I was very disappointed in my results from the first meet, so I improved my training and fitness. This helped me swim better and faster, which helped me to greatly improve my results.

Set the scene and provide supporting details. Again, start by brainstorming different ways to begin; then go ahead and craft an outline and a first draft.

Topic Sentence:   I was embarrassed at finishing last in my first competitive swim meet, so I began working on ways to improve my performance.

• Detail Sentence 1:   I spent extra time with my coach and the team captains learning how to improve my technique.
• Detail Sentence 2:   I started running and lifting weights to increase my overall fitness level.

Provide additional supporting details, descriptions, and experiences to develop your general idea in your essay writing.

Topic Sentence:   Over time, my results began to improve and I was able to qualify for the state championship meet.

• Detail Sentence 1:   My technique and fitness level made me faster and able to swim longer distances.
• Detail Sentence 2:  I steadily got better, and I began winning or placing in the top 3 at most of my meets.
• Detail Sentence 3:  My results improved to the point that I was able to qualify for the state championship meet.

Body Paragraph 3

The next step in the writing process is to provide additional supporting details, descriptions, and experiences. You can then divide them up under different headings.

Topic Sentence:   With my new confidence, techniques, and fitness level, I was able to finish 2nd at the state championship meet.

• Detail Sentence 1:   I was able to swim well against a higher level of competition due to my training and technique.
• Detail Sentence 2:  I was no longer embarrassed about my last-place finish, and was able to use it as motivation!

Conclude the narrative essay with a recap of the events described or a reflection on the lesson learned in the story. Briefly summarize the details you included under each heading.

Concluding Sentence:   I used my last-place finish in my first competitive swim meet as motivation to improve my performance.

Descriptive essay outline example

We will now delve into a descriptive essay outline example. Descriptive essays aim to create a vivid and detailed description of a person, place, object, or event to paint a picture for the reader. The intention is to immerse the reader in the subject matter fully.

In this case, the essay provides an in-depth description of a visit to the Hockey Hall of Fame in Toronto. The essay will use sensory and descriptive details to create a vivid and memorable experience for the reader.

Visiting the Hockey Hall of Fame

Introduce the subject of your descriptive essay with a thesis statement covering the person, place, object, etc. you are writing about.

Thesis: The Hockey Hall of Fame is full of sights, sounds, and experiences that will delight hockey fans of all ages.

Set the scene and provide factual details.

Topic Sentence:   The Hockey Hall of Fame is located in Toronto, Canada and features exhibits from amateur and professional hockey.

• Detail Sentence 1:   The Hall is located in downtown Toronto and is visited by 1 million people every year.
• Detail Sentence 2:   You can see exhibits ranging from the early beginnings of the sport to the modern NHL and Olympics.

Provide additional sensory details, descriptions, and experiences.

Topic Sentence:   There are many types of exhibits and shows, including activities you can participate in.

• Detail Sentence 1:  Player statues, plaques, and jerseys decorate the walls in every room of the Hall.
• Detail Sentence 2:  Many of the exhibits have movies and multimedia activities that make you feel like you're part of the game.
• Detail Sentence 3:  You can even practice shooting pucks on virtual versions of some of the game's greatest goalies!

Conclude the essay with a paragraph that restates the thesis and recaps the descriptive and sensory details.

Concluding Sentence:   The Hockey Hall of Fame is an experience that combines the best sights, sounds and history of the game in Toronto.

Expository essay outline example

In the following section, we will explore an example of an expository essay. An expository essay aims to explain or describe a topic using logic. It presents a balanced analysis of a topic based on facts—with no references to the writer’s opinions or emotions.

For this example, the topic is "Why The School Year Should be Shorter". This essay will use logic and reason to demonstrate that a shorter school year could provide various benefits for students, teachers, and school districts.

Why The School Year Should be Shorter

Introduce the primary argument or main point of an expository essay, or other types of academic writing, using a thesis statement and context.

Thesis: The school year is too long, and should be shortened to benefit students and teachers, save districts money, and improve test scores and academic results. Other countries have shorter school years, and achieve better results.

Describe the primary argument and provide supporting details and evidence.

Topic Sentence:   A shorter school year would benefit students and teachers by giving them more time off.

• Detail Sentence 1:   Students and teachers would be able to spend more time with their families.
• Detail Sentence 2:  Teachers would be refreshed and rejuvenated and able to teach more effectively.

Provide additional supporting details and evidence, as in this essay outline example.

Topic Sentence:  A shorter school year would save school districts millions of dollars per year.

• Detail Sentence 1:   Districts could save money on energy costs by keeping schools closed longer.
• Detail Sentence 2:  A shorter school year means much lower supply and transportation costs.
• Detail Sentence 3:  Well-rested and happy students would help improve test scores.

Provide additional or supplemental supporting details, evidence, and analysis, as in the essay outline example.

Topic Sentence:   Shortening the school year would also provide many benefits for parents and caregivers.

• Detail Sentence 1:   A shorter school year would mean less stress and running around for parents.
• Detail Sentence 2:  Caregivers would have more balance in their lives with fewer days in the school year.

Conclude the essay with an overview of the main argument, and highlight the importance of your evidence and conclusion.

Concluding Sentence:   Shortening the school year would be a great way to improve the quality of life for students, teachers, and parents while saving money for districts and improving academic results.

Sample research paper outline

Now let’s dive into a research paper outline. Unlike a typical essay, a research paper presents a thorough and detailed study on a specific topic. However, it shares the same foundation with an essay in terms of structuring the ideas logically and coherently. The outline for a research paper includes an introduction, a series of topic points that cover various aspects of the main topic, and a conclusion.

This research paper will explore the background of Mt. Everest, the major explorers who attempted its summit, and the impact of these expeditions on Mt. Everest and the local community.

The Conquest of Mt. Everest

• Location of Mt. Everest
• Geography of the Surrounding Area
• Height of the mountain
• Jomolungma (Tibetan name)
• Sagarmatha (Nepalese name)
• The number of people who have climbed Everest to date
• First to reach the summit (1953)
• Led a team of experienced mountain climbers who worked together
• Norgay was an experienced climber and guide who accompanied Hillary
• Sherpas still used to guide expeditions
• Leader of the failed 1996 expedition
• Led group of (mainly) tourists with little mountain climbing experience
• Loss of trees due to high demand for wood for cooking and heating for tourists.
• Piles of trash left by climbing expeditions
• Expedition fees provide income for the country
• Expeditions provide work for the Sherpas, contributing to the local economy.
• Introduction of motor vehicles
• Introduction of electricity

The Everest essay outline template is based on a research paper submitted by Alexandra Ferber, 9th grade.

Happy writing!

Writing an essay outline is a crucial step in crafting a well-structured and coherent essay. Regardless of the type of essay - be it persuasive, narrative, descriptive, expository, or a research paper - an outline serves as a roadmap that organizes your thoughts and guides your writing process. The various essay outline examples provided above serve as a guide to help you structure your own essay. Remember, the key to a great essay lies not just in the content but in its organization and flow. Happy writing!

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Essay on Inflation with Quotations | Rising of Prices Essay with Outline

Rising prices essay with outline for matric, fa, fsc, 2nd year, ba and bsc (price hike).

Here is an essay on Inflation with Quotation s and Outline for students. The same essay could be written under the title Essya on Price Hike, Essay on Inflation, Essay on Rising of Prices and Essay on Increasing Prices. If you have essay content and you need only quotations, go here . For more Essays with Quotations visit this page . In this essay, we will discuss the Reasons of inflation and will end up with the solutions. Some other essays are also available here .

Price Hike or Inflation Essay with Quotations

“inflation makes the wealthiest people richer and the masses poorer.” – (james cook).

Inflation means a general increase in price or increase in the supply of money. Inflation is a broad, variable and complex term. Only economists can have its better comprehension from an economic point of view. It is hard to understand its various kinds for a layman.

There is “Creeping Inflation”. It is a healthy trend as it increases development. “Walking inflation” affects savings. “Running Inflation” is hard to control. It affects consumption and savings. It leads to economic recession “Galloping or Hyper Inflation” is disastrous and fatal to the economy. “Demand-pull” inflation is because of aggregate in demand of a commodity. “Cost-Push Inflation” occurs when the cost of production increases.

“Inflation is taxation without legislation.” – (Milton Friedman)

Inflation is not an unexpected and unpredictable phenomenon. Its seeds are sown because of mismanagement; weak or low market knowledge, indifferent attitude towards economic indicators, weak administrative machinery, absence or lack of check and balance, bureaucratic manipulation, inadvertent boarding and strong association of the market leaders. Disturbance in demand and supply ratio is yet another factor.

Inflation is a menace in the poor or underdeveloped or developing countries. It badly affects the living standard of the people. It increases poverty and decreases purchasing power. Inflation creeps slowly into the economic system and assumes magnitude by creating an alarming situation. Inflation destroys or disturbs market balance badly.

World’s richest investor Warren Buffet says,

“If you buy things you don’t need, soon you will have to sell things you need.”

Inflation increases unemployment and, as a result, not only skilled but also unskilled workers are laid off. It creates future social problems. It permeates into our social fabric and disturbs everything. Anxiety and depression are the immediate outcomes of inflation. It eats up the purchasing capacity of people. It belittles the efforts done by the bread earners to meet the growing needs of their families. Inflation gives rise to dishonesty and corruption.

“The safe way to double your money is to fold it over once and put it in your pocket.” (Frank Hubbard)

There is a popular believe that once prices increase, they never decrease. It is true to some extent. However, we can minimize the effects of inflation by concentrating efforts. Inflation can b controlled by the long term and short term sound economic planning. Market competition can bring about reduction in inflation. The local industry should be promoted to reduce inflation. Accessible and cheaper goods can minimize the adverse effects of inflation. These can also provide people with alternatives. This may affect the standard of living but people are protected against the adverse effects of inflation. Proper monitoring and regulatory control can help in reducing inflation. Retailers and hawkers sell things of daily use at their own swill. They do so because there is no check and balance. There is nobody to enforce the law and evaluate the prices at which things are sold.

Inflation can be viewed as an international phenomenon. Only should planning by the Government can avert it. Inflation is misery and people can be saved from this misery through mutual effort. To sum up, inflation, in any form, undermines the very foundations of a social set-up. It makes the rich richer and the poor poorer. It carries the social stigma that breeds dissatisfaction among all the factions of society.

The government should take adequate measures to control this social evil.

“Production is the only answer to inflation.” – (Chester Bowles)

You may also like essay on importance of education, essay on rising of prices | inflation essay with outline for class 10, class 12 and graduation.

• Introduction
• The problem of inflation in Pakistan
• Effect of rising prices on the life of common man
• Reasons behind the inflation

The prices of necessities of life are rising constantly. They are posing a serious problem for everybody in the country. The problem of rising prices has become a universal problem. This problem assumes an acute term in developing countries like Pakistan. The majority of people in our country belong to the low-income group. Usually, they have very meager sources of income. Very often the income of people is fixed. Therefore, they are hard hit by the high prices of essential goods which register a rise every week and every month. The result is that the standard of living of poor people is dwindling day by day.

Inflation has an adverse effect on different sections of society. Most of the people have not sufficient means to buy the necessities of life. They are compelled to use unfair means to have them. In this way, society is troubled by pick-pockets, thieves and robbers etc. Those government servants who cannot make both ends meet become corrupt. They abuse their powers and accept the bribe. In this way, they promote injustice and cruelty in the national life.

Rising prices also affect national life in the economic field. The businessmen think of adulteration black marketing and other methods to maximize their profits. Since the prices of goods are beyond the reach of common man, the standard of living goes on falling gradually.

There are many factors which cause a rise in prices.

First, the most important of these is the increase in population. The population of a country is increasing at a rapid rate. But the economic resources do not increase at the same rate. It results in inflation.

Second, if the demand is higher than the supply, the goods will be naturally sold at higher prices. Sometimes the government imposes higher taxes on certain commodities so that their prices go up. The wrong policies of government often lead to hoarding, smuggling and black marketing of the essential goods.

Third, if a businessman has a monopoly in the production and sale of a certain commodity, he can raise its price as and when he desires. In developing countries like Pakistan, developmental activities usually cause inflation. The funds and the loans that are acquired from foreign countries are invested in different projects. They increase the circulation of money in the country and cause inflation.

Our first duty should be to check the birth rate. We should make vigorous propaganda in favour of family planning. Second, the government should not impose so many taxes, levies, duties or surcharges on those commodities which are used by the common man and which are considered necessary for human life.

After this essay on Inflation, go for Poverty in Pakistan essay .

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Essay on Inflation | Inflation Essay for Students and Children in English

February 14, 2024 by sastry

Essay on Inflation:  A sustained rise in the prices of commodities that leads to a fall in the purchasing power of a nation is called Inflation. Although inflation is a part of the normal economic phenomena of any country, any increase in inflation above a pre-determined level is a cause of concern. The causes of inflation are many. While it is -often cited that a drop in India’s agricultural output lead to the decline in supply, figures tell a different story.

You can read more  Essay Writing  about articles, events, people, sports, technology many more.

Long and Short Essays on Inflation for Kids and Students in English

Given below are two essays in English for students and children about the topic of ‘Inflation’ in both long and short form. The first essay is a long essay on Inflation of 400-500 words. This long essay about Inflation is suitable for students of class 7, 8, 9 and 10, and also for competitive exam aspirants. The second essay is a short essay on Inflation of 150-200 words. These are suitable for students and children in class 6 and below.

Long Essay on Inflation 400 Words in English

Below we have given a long essay on Inflation of 500 words is helpful for classes 7, 8, 9 and 10 and Competitive Exam Aspirants. This long essay on the topic is suitable for students of class 7 to class 10, and also for competitive exam aspirants.

India’s food production crossed 235 million tonnes during years 2010-11 as per the latest estimates and this is the highest since Independence. The previous highest production, at nearly 233 million tonnes, was achieved in years 2008-09. Agriculture recorded a 5.4% growth in years 2010-11 compared to the 4% growth achieved all these years, according to S Ayyappan, Director-General of the Indian Council of Agricultural Research.

However, inflation reflects overheating: the supply capacity of the economy is simply unable to match the demands on that capacity. Moreover, purchasing power of consumers is increasing and hence demand is accelerating. Minimum Support Prices (MSPs) for agriculture have also been increasing. The MSPs for various varieties of paddy during the years 2009-10 was between ₹ 950-980 per quintal and during the years 2010-11, it increased to ₹ 1000 to 1030 per quintal.

Moreover, for pulses such as Arhar and Moong the MSPs in years 2009-10 was ₹ 2300 and ₹ 2760 respectively, while in years 2010-11, it increased to ₹ 3000 and 3170 respectively. Another major cause of inflation is the increase in the prices of fuel internationally, which is contributing to the overall price inflation. There has been a steady increase in the international prices, with the Indian crude basket priced at $11 3.09 per barrel, as on May 2011. Any change in price of diesel immediately impacts price of food items, since most of them are dependent on transport through several 100 km. Inflation, in short, is “too much money chasing too few goods”. According to analysts, corruption, mafia operations, greed for money by politicians and industrialists, counterfeiting of currency notes etc., also contribute to corruption as they add to the availability of liquidity in different forms, which in turn adds to inflation.

High level of inflation distorts economic performance. It has added pressure on the Central Bank to raise rates despite signs of slow growth in the Indian economy. Thus, high inflation and rising interest rates are crimping domestic demand and slowing down the economy. Inflation also affects investment as higher long-term inflation adversely affects growth and investment. High inflation is pushing up the cost of credit for firms as well as escalating their input costs by inflating their spending on raw materials and wages. Corporate investment is affected by cost escalation of inputs, and inflation is waning the confidence in the economic growth.

Short Essay on Inflation 150 Words in English

Below we have given a short essay on Inflation is for Classes 1, 2, 3, 4, 5, and 6. This short essay on the topic is suitable for students of class 6 and below.

Food inflation adversely affected the country in 2013 and 2014 consecutively. Curbing the prices of goods is essential in order to attain revival from the slowdown in economic growth. Food bills already consume 35% of household incomes.

Inflation, as pointed, out by economists, occurred due to weak monsoon needed for the cultivation of summer crops. Despite being the second largest producer of fruits and vegetables after China, India suffers from shortages, owing to the lack of efficient cold storage and transport facilities. RBI Governor though, has promised to cut down inflation to 8% by 2015. All measures to curb inflation would be successful only if the middle men in the supply chain are barred from carrying out their nefarious activities. Only can then we not lose out on onions and tomatoes on our dinner plates.

Inflation Essay Word Meanings for Simple Understanding

• Output – the material produce or yield, product
• Escalating – to increase something in extent
• Accelerating – to cause faster or greater activity, development, progress, advancement
• Crude – lacking finish, polish, or completeness
• Counterfeiting – made in imitation so as to be passed off fraudulently or deceptively as genuine
• Distort – to give a false, perverted, or disproportionate meaning to, misrepresent
• Crimping – to check, restrain, or inhibit; hinder
• Escalation – increase in intensity, magnitude, etc
• Waning – decreasing in strength, intensity, etc
• Revival – restoration to life, consciousness, vigour strength, etc
• Nefarious – extremely wicked or villainous
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Home — Essay Samples — Economics — Inflation — Measures to Control Inflation

How to Control Inflation in Pakistan

• Categories: Inflation

About this sample

Words: 634 |

Published: Jan 15, 2019

Words: 634 | Page: 1 | 4 min read

Table of contents

Inflation essay outline, inflation essay example, introduction.

• Introduction to the issue of inflation in Pakistan

Controlling Inflation Through Monetary Policy

• Tightening monetary policy by increasing interest rates
• Impact of higher interest rates on borrowing, consumer spending, and inflation
• Currency value and import costs

Reducing Government Expenditure

• Strategies for reducing government spending
• Effect on demand and inflation

Increasing Taxes

• Using taxation to reduce disposable income
• Balancing tax increases to avoid worsening poverty

Promoting Local Production

• Encouraging local industries and businesses
• Impact on supply and inflation

Stabilizing Exchange Rates

• Maintaining exchange rate stability
• Reducing the prices of imported goods and services

Controlling Money Supply

• Methods to control the money supply
• Role of central banks and commercial banks

Managing Inflation Expectations

• Creating a stable and transparent environment
• Communication with the public

Implementing Structural Reforms

• Tax system, infrastructure, productivity, and public sector reforms
• Impact on competitiveness and supply
• Summary of the multi-pronged approach to controlling inflation in Pakistan

Works Cited

• Ahmed, A. (2021). Understanding Pakistan's inflation dynamics. Business Recorder.
• Government of Pakistan. (2022). Pakistan Economic Survey 2021-22. Ministry of Finance.
• Hussain, M. (2020). Inflation in Pakistan: Causes and possible solutions. The Express Tribune. https://tribune.com.pk/story/2250261/inflation-in-pakistan-causes-and-possible-solutions
• Khan, M. A. (2021). Pakistan's economy and inflationary pressures. The Diplomat. https://thediplomat.com/2021/01/pakistans-economy-and-inflationary-pressures/
• Khan, S., & Ahmad, H. (2020). Fiscal deficit, external debt and inflation nexus: Evidence from Pakistan. The Journal of Developing Areas, 54(3), 1-15.
• Khan, T. A. (2019). Impact of taxation on inflation: Empirical evidence from Pakistan. Pakistan Journal of Commerce and Social Sciences, 13(3), 693-713.
• Khattak, S. A. (2021). Pakistan's economic growth, inflation and fiscal policy. Journal of Economic and Social Thought, 8(1), 25-38.
• Majeed, M. T. (2020). Examining the relationship between inflation and economic growth in Pakistan. Bulletin of Monetary Economics and Banking, 23(1), 21-36.
• Qayyum, A., & Ahmed, A. (2021). An empirical analysis of inflation dynamics in Pakistan. The Pakistan Development Review, 60(1), 1-24.
• State Bank of Pakistan. (2022). Monetary policy statements. https://www.sbp.org.pk/monetary_policy/statements/index.htm

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Essay on inflation/Rising prices in Pakistan with quotations

Rising prices / inflation essay 300 - 400 words.

Inflation essay for 2nd year, class 12 PDF download

Inflation is taxation without legislation - Milton Friedman

Inflation is the crabgrass in your savings - Robert Orben

Inflation is the parent of unemployment and the unseen robber of those who have saved - Margret Thatcher

Production is the only answer to inflation - Anonymous

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Opinion | Essays related to climate change praised, bill…

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Opinion | Essays related to climate change praised, bill before Congress touted

Thank you for the recent columns in defense of the Inflation Reduction Act (“America finally has momentum in the push for cleaner energy. We must not go backwards,” June 10 ) and on how climate change is driving up the price of olive oil (“Olive oil prices, climate change and canaries are all connected,” June 10 ). We need to keep the climate crisis in the public eye.

The Inflation Reduction Act has been a great start to moving toward a clean energy economy. It should be maintained, and where advisable, strengthened. But more is needed. A recent study shows the most effective addition to current policy is a rising carbon tax on fossil fuels, with proceeds rebated to American households.

Such a policy is before the House of Representatives in several bills, including the Energy Innovation Act (HR 5744) (San Diego Rep. Scott Peters is a co-sponsor). A carboon fee and dividend bill like this is a reasonable, effective and robust approach to achieving a clean energy economy without lowering economic growth.

Tell your Congress members you support HR 5744

— Carl Yaeckel, San Diego

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