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As a result, the cost of food, non-alcoholic drinks, and petrol declined. The statistic is still under expectation to fall to 1% towards the end of 2014. The fall in inflation has been good news for households since the prices of commodities were higher than the average income of individuals since the financial crisis. Initially, most of the families were not able to buy commodities due to the low income with a rising inflation in the UK. Also, the news in the article unveils to the consumers that their price indices were able to drop by 0.1% from 1.6%. In addition, the news suggests that the Retail Prices Index was able to drop from 2.5% to 2.4% as from the beginning of 2014 (BBC News).
In conclusion, I have learnt few lessons from the news. I have learnt that the annual rate of inflation tells us the changes in the cost of living. I have also learnt that the Retail Prices and Consumer Prices Indices are the main measures of inflation in the country. Lastly, I have learnt that inflation can only be controlled by the Central Bank. Thus, the Central Bank determines the rate of inflation in the
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In the same way, it will provide an analysis into some of the effects of inflation while focusing on the different types of inflation arising from different economic situations. Introduction Inflation is described to be a rate in which the overall price of goods and services is increasing while the purchasing power decreases in an economy (Nicholson 57).
In effect, inflation is the loss or the diminishing of value of money in a given economy (Blanchard 45). In plain language, inflation is the instance where goods and services get expensive or the phenomena where people complain that the price of commodities is rising.
In common usage inflation refers to the state of the economy when the money supply is much higher than the physical quantity of goods available in the economy. According to Keynes, inflation refers to that phase of rise in the general price level after the output in the economy grows beyond the full employment level of output (Frisch, 1983).
The effects of inflation can affect an economy in positive and negative ways or both positively and negatively simultaneously because it affects the differently. In many circumstances, there are different explanations that could be given to the rise of inflation in an economy and which could explain the reasons why a currency can lose its purchasing power as compared to different circumstance in market.
Businesses are reluctant to make investments during periods of volatile inflation. Countries suffer from a tax rate that is based on pre-inflationary periods that are less than the current value. It also causes exports to go down as prices go up resulting in a trading deficit.
In cases where demand increased tremendously and threatened to augment inflation rates and cause large balance of payments deficits-income, instead of monetary policy, was used as the instrument to keep
This discussion concludes by outlining control measures necessary to manage inflation and the alternatives polices that can be taken by the government to manage inflation.
Inflation refers to increment of price levels in
Precisely, companies or organizations which are operating in an energy Sector primarily encompasses its operations pertaining to the engagement in exploration & production activities, marketing, refining and refilling procedures,
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