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INFLATION
Inflation
Inflation means rising general level of price of goods and services over time, later time purchasing power is falling. It is measure annually percentage rising. Inflation result of pressures in expressing economical condition.
For example suppose that cost of a thing at Rs.100 few months ago, present cost around Rs.120 that thing. Here is Rs.20 deference can say inflation.
Trying to explain by 2nd example of understanding inflation respects to stock market, Economical rate of inflation is at 7% and we invested our money inflation was 12% around. This investment decreased into our saving Value its profit. Therefore Management of investment should be proper and decline risky.
In the economical cycle, Good business was accompanied by raising level and poor business falling prices level. It’s generally think that A Little Inflation helpful profits. At least, Low Rate of inflation is good whole sectors.
There are many points which related to inflation, but we should mind of weekly declare & annual level of it referenced to stock market. Inflation is declared every Thursday after 5:00 pm. Inflation (WPI) is one them factor which is directly connected to our stock market. It’s most important for traders what weekly inflation data.
Today, increasing or decreasing the money supply is mainly maintained by India’s central banking authorities Reserve Bank of India and the effects of increasing the money supply are further increased by credit expansion due to the Fraction-Reserve Banking system employed in most economic and financial systems in the world. Inflation in the Indian is on estimated base of fluctuation in the Wholesale Price Index. (WPI)
Causes of inflation
There are two major types of inflation
Demand: -
Much money for purchasing few things. In other words, if require of that thing is increasing faster than supply, price will increase. In this conduction, price is raising so, inflation rising as per definition.
Cost: -
In this matter, cost of row materials (input) which need to Company is boosted, company need to raise prices to maintain their profit of business. Causes of increased row materials may tax, import, interest, etc.
Measuring inflation of India
There are two type method using measuring to inflation which are CPI (consumer price index and WPI (Wholesale price index).Wholesale price index (WPI) is the measure for inflation in India. The government comes out with WPI inflation figures every Thursday. In the calculation of WPI, the 3 major variables are Primary articles, Fuel, power, light and lubricants and manufactured products. Manufactured products have always enjoyed more weight in the calculation of WPI.