DMPQ- . In how many ways inflation affect the indian economy?

Better Savings Account Rates

Increased inflation may lead may turn out to be investor friendly, Investors with short-term aims might invest in a high-interest savings account, which may get better opportunities as increasing inflation often prompts the Federal Reserve to increase interest rates. Better savings can be more positive in the form of better return on money.

Cheaper to Travel Abroad

The rise in inflation will lead to a drive in American Dollar, which makes purchases in foreign countries cheaper when compared with U.S. dollars, which makes the business trade in foreign countries as compared with US dollars. The trade and business transactions like the cost of travel food and purchase of other items can be cheaper.

Cost-of-Living Adjustments

Even if there is no money to invest in stocks, gold or other assets that might be positively impacted by rising inflation, a sensible inflation (3%-5%) could still benefit the financial situation. The Social Security and additional security income could leads to an increase in the monthly spending when the consumer price index, one of the inflation measures, rise up. This is called a cost of living adjustment.

Increased Material Costs

The inflation results in rises of prices of all materials, substances commodities and services including medical/health care and prices for prescription drugs., and the rent could also go up and may pay for the increased costs of items on the same income, so inflation can be tough. This has far reaching impact especially during hyperinflation (when very high rates of inflation spiral out of control),which is further called as core inflation-excluding certain volatile markets like energy and food. The collective impact will be on Consumer Price Index” and more on the living of common man.

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