Category: Inflation
Controlling Inflation
Controlling Inflation forms a significant part of the economic activities of a nation. Inflation is an economic condition characterized by a general rise in the prices. Thus, controlling Inflation is important as unrestrained increase of the prices may culminate in Hyperinflation, and an excessive fall in the prices may lead to Deflation. Both the situations are not healthy and sound for the overall growth and development of a country’s economy.
Headline Inflation
Headline inflation reflects the extent to which the prices of all goods and services in an economy have risen in a given period. Headline inflation rate is a measure of the rate at which the cost of living in an area has increased. Headline inflation is not an accurate representation of the underlying rate of inflation, since it takes into account food and energy prices which are highly volatile in nature. Therefore, for the purpose of formulating monetary policy, economists generally do not consider headline inflation.
