Price Rise Create Inflation

To understand the mechanism of price rise we must know what inflation is. It means more money purchasing few goods. Goods are usually nonrenewable as resources deplete day by day; resources which are linked with soil. A time comes when man made money, paper money, tends to exceed the volume of goods and services available. So inflation means more paper money. Under compelling circumstances the government has to print more notes. Paper money is created incurring almost a nil expenditure or just a nominal expenditure. No government wants to resort to inflation but when its gold and silver reserves dry up to meet foreign payments or debts it has to take this step willy-filly. Paper money the government gets for a song. Trade depression or paucity or scarcity of goods is not necessarily the sign of inflation. When you have your pockets full of paper money but you can’t buy articles because they are conspicuous by their absence, inflation surfaces and raises its ugly head to devour one and all. Necessaries of life become scarcer and dearer.

This inflation is the harbinger of a plethora of evils. Corruption stalks the land and becomes a fashion. The highest bidder gets the goods. Employees with meager income resort to corrupt practices to augment their Income to buy daily bread for their families. Traders on their own increase prices as they know the potential buyers has bag full of paper money. This goes on. Rising prices exert all round impact