1. Presented by:
Pratigya Gautam

2. •The rate at which the general level of prices for
goods and services is rising, and, subsequently,
purchasing power is falling.
•As inflation rises, every dollar will buy a
smaller percentage of a good.
•The annual percentage change in CPI is used as
a measure of inflation.

3.  A consumer price index (CPI) measures
changes in the price level of consumer
goods and services purchased by households.
 Examines the weighted average of prices of a
basket of consumer goods and services, such as
transportation, food and medical care.
 Used to adjust inflation.
 Closely watched measure of inflation

4.  Determine the composition of typical consumer
basket of goods.
 Collect data on the price of all items in the
basket of particular period.
 Compute the CPI of particular period
CPI= 100*(Cost of basket in that period/cost
of basket in base period)

5.  How does supply of goods and services
affect the price?
 How this price brings fluctuation in the
inflation rate?

6.  Internal Factors:
 Frequent closures, strikes, load-shedding and
political instability
 External factors:
 Price hike in petroleum products, impact of
Indian inflation
 Inflation rate had stood below 5.0 percent for
about half the decade prior to FY ’05/06.

7.  In Fiscal Year 2006/2007 = 5.6%
 In Fiscal Year 2008/2009 = 12.6%
Again,
 In Fiscal Year 2011/2012 = 7.7%
 In Fiscal Year 2010/2011 = 9.6%
Reason for decrease in inflation:
 Decline in prices of cereals grains and their
products.

8.  Fiscal Year 2011/12 - 7%
 Fiscal Year 2010/11- 10.7%
Reasons:
 Increase in production of monsoon and dry
seasons crops.
 Decline in price of food grains in India.

9.  Fiscal Year 2011/12 - 9.4%
 Fiscal Year 2010/11 – 5.3%
Reasons :
 Price hike in petroleum products.
 Deflation of Nepalese currency against US
dollar.
 Closures and strikes.

10. Fiscal Year Average
2006/07 5.9
2007/08 6.7
2008/09 12.6
2009/10 9.6
2010/2011 9.6
2011/12 7.7

11.  CPI based point-to-point annual urban
aggregate CPI remained at 7.0 % in mid march
2011
 Inflation for the same period in the previous
year was 10.7 %
 Inflation declined due to decline in prices of
cereals grains and their products
 Impact of other factors are yet to be evaluated

12.  Seasonal constraints
 GDP and Per capita income in decreasing trend
but increase in price level.
 High labor cost.
 Natural Causes.
 Growing concrete jungles.
 Transportation charges.
 Transmission through trade.
 Pressure tactics.

13.  Control on food price inflation.
 Need of structural changes in economy.
 Need of active conduct of Monetary Policy.
 Tightening the fiscal policies.
 Effective and sufficient supply.
 Timely announcement of the government's policy.

14.  Inflation’s effects in an economy can be
positive or negative.
 The increase in Production (Y) would lead to
increase in supply capacity of goods and
services .
 Increase in price of goods and services
mainly leads to inflation.
 The increase in supply make these goods
available in low price.
 Hence , increase in output and decrease in
price increases GDP and reduces inflation.