Inflation ordinarily means the abnormal price hike of goods. In economic terms, inflation or rising galloping prices is the result of increase in the supply of money than the supply of goods. But there are countless factors that cause price hike in any country. In our country, we see how fast our population is rising and how much more the people need in terms of food, fruit, clothes, shoes, soap and other articles of daily use. Our farms and factories are not producing food and goods according to the growing needs of the people. As a result, the princes of commodities shoot up and Govt. is forced to print more currency notes to satisfy the people. This is exactly the inflation we are witnessing today.practicalcentre.blogspot.com
The second cause of inflation or rising prices is rise in the standard of living of the people. With the greater demand for clothes, shoes, fine food and other commodities (articles), their prices register a constant rise. Thus, a rise in the incomes of the people is also a sure sign of an increase in demand of goods that results in price hike too.
The third cause is the decrease in exports and increase in imports as it is happening in our country. When we buy more and more things (commodities) from other countries and sell less, imports become more expensive. Poor distribution channels also result in price hike.
Commodities I articles move from wholesalers to middlemen and then in the hands of retailers. Enough profit is milked in the process and customers suffer. Finally, heavy government taxes and duties on goods produced inside the country and imported from abroad cause a rise in the price.
The only solution to this giant problem of inflation is greater agriculture and industrial production, greater exports and lighter taxes. In addition a control over population growth is utmost necessary.