Inflation or price inflation is a rise in the price level in an economy which results in a sudden drop in the purchasing power of money. It is a loss of real value in the medium of exchange. The measure of inflation is the inflation rate and is measured in percentage. The purchasing power of currency decreases as goods and services become dearer. This impacts the cost of living and gets higher. However, a certain level of inflation is required in the economy. Inflation is taken as both positive as well as negative depending upon which side one takes and how constructively the situation gets managed. For example, People owning tangible assets would want to sell their assets as they will get a higher price for the same. This will not go accordingly with the buyer as they would not want to buy the assets at a higher price. Inflation rate serves as an indicator of the position of an economy and is keenly observed by the government and central banks to help them make appropriate changes to their monetary policies. Inflation rate is determined as the rate of change that takes place in the consumer price index over a time period.

Sahreen Younis Ahanger

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