What is inflation & why it increased so much over past two years?

Inflation is the price hike over time period. It has been observed that past two/three years have seen too much inflation after a long time. There are multiple reason for price hike, but here we’ll discuss major reasons:

  1. Coronavirus Pandemic & Lock-downs:
                Lock-downs due to COVID-19 created a sense of fear of non-availability of essential food items among people, resulting in pent-up demands. As a consequence, too much demand than usual, increase supply for a shorter time but decreased for a long time, which resulted in price hike of that items.
                Government expenditure over un-expected pandemic control decreased or diminish subsidies given to mitigate inflation.
  2. Ukraine Invasion by Russia:
                Ukraine was the 4th largest wheat exporter country in the world. Because of war, wheat export was affected and wheat price increased.
                Russia was the 2nd largest crude oil exporting country. Its export affected because of sanctions over Ukraine war, which resulted in oil price hike. Surge in oil price increase transportation labour and as a consequence price hike.
  3. Globalisation of inflation:
                Spanish Flue and World War-1 did not produce much inflation as of COVID-19 and Ukraine war. Why? Because, now world has become a global village and the change in one part of the world affects simultaneously other parts of the world.
  4. Global Trade War:
                Trade war among the developed states is also a big reason behind the price hike globally.

Suggestions:

  1. Government should go for long term remedy by encouraging/supporting renewable energy sources and agriculture. Government should encourage, support and motivate the businessmen to manufacture Solar Panels in country than to import it from foreign countries, which will decrease its price and increase its instalment.
  2. Reduce or end tax on oil and electricity, and subsidise essential food items.
  3. People should search for alternatives according the changing scenario. Dressing, ceremonies, luxuries should be according to the inflation hike.
  4. Public transportation should be expanded like in China to mitigate the petrol price hike.
Labels: ,