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ECONIMIC POLICY & THE GLOBAL ENVIRONMENT

Do any groups of people gain and lose from inflation?

What is inflation?

Inflation is defined as a rise in the price of goods and services in an economy, in other words also represents a decline in the value of your current money.(1) It can be measure using the below formula:

Inflation Rate = { x 100 }

CPI (Consumer Price Index) is a measure of the average of prices paid by the urban consumers for a fixed basket of consumer goods and services and is calculated monthly by the Bureau of Labor Statistics (BLS) ( Parkin 8th Edition, Economics, pp. 514). A list of annual inflation rate at Statistics Singapore website shows an increase of inflation rate from 2005 to 2007.(2)

Inflation is generally caused by two theories, Demand Pull and Cost-Push Inflation.

Demand Pull inflation is a result of higher consumer demand for too few goods. It is common in expanding economy......

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