ECONOMICS PROJECT

(2009-2010)

INFLATION
in
day to day life
 DECLARATION

We hereby declare that this report entitled

“INFLATION IN DAY O DAY LIFE” has been
done by us during the academic year 2009 -2010
under the guidance of Mrs. Geisha for the
fulfillment of requirement in plus one project
evaluation in Economics and Statistics.
We also declare that this report is the result of
our own efforts and ability.

Institution: Kendriya Vidyalaya No2 Group Members:

Date : 20-03-2010 Thaha Abdul Wahid
Mohammed Junaid
Mahesh A
Nithin P
 ACKNOWLEDGEMENT

We wish to extend our gratitude to all those who

have helped us to complete this project successfully.
We are really indebted to our guide Mrs. Geisha
for her guidance, commitment, whole hearted
cooperation and assistance that enabled us to complete
this project successfully.
Our Computer Laboratory in charge Miss. Neha
Vinayak deserves special mention as she has provided
us with computer and internet facility for reference
and hence with pleasure we express our sincere
gratitude to her.
Also we extend our thanks to all the consumers
and traders who have answered our questions during
survey.
Finally we express our thanks to all our friends
who have helped us to complete this project
successfully.
 PREFACE
Our country faces a lot of economic problems.
Even after so many years since independence we are
not able to cope with these problems. The main reason
for this is the illiteracy of the citizens about such
problems.
Inflation is one such problem. Inflation is a not
familiar word in terms of day to day life but a familiar
word in economic terms. But price rise is a familiar
word in day to day life; inflation may be defined in
simplest words as the rate of price rise.
This is the report of our project work titled
“INFLATION IN DAY TO DAY LIFE”. Impact of the
unfamiliar economic phenomenon, inflation, in day to
day life is clearly worded through this project. For
the same, data has been collected from the public
belonging to various social groups (poor, middle class,
rich….). Direct Interaction with consumers and
traders increased the quality of the information.
Through this project we could learn more about
the economic term inflation and how global
phenomenon affects the local day to day life.
 CONTENTS
Introduction
Problem Study

• Chapters:
Chapter 1: Inflation – Definition
Chapter 2: Forms of Inflations
Chapter 3: Inflation – How is it measured?
Chapter 4: Inflation – How is it caused?
Chapter 5: Problems due to inflation
Chapter 6: Methods to control Inflation
Chapter 7: Hyperinflation, Disinflation and
Deflation

• Problem Analysis
a) Questionnaire to consumers
b) Questionnaire to traders

• Diagrams Representing Inflation

• News Paper Reports
Limitations of the Study
 INTRODUCTION

Inflation can be defined as a rise in the general price level and therefore
a fall in the value of money. Inflation occurs when the amount of buying
power is higher than the output of goods and services. Inflation also
occurs when the amount of money exceeds the amount of goods and
services available. As to whether the fall in the value of money will
affect the functions of money depends on the degree of the fall.
Basically, refers to an increase in the supply of currency or credit
relative to the availability of goods and services, resulting in higher
prices.

Therefore, inflation can be measured in terms of percentages. The

percentage increase in the price index, as a rate per cent per unit of time,
which is usually in yearly. The two basic price indexes are used when
measuring inflation, the producer price index (PPI) and the consumer
price index (CPI) which is also known as the cost of living index
number.
PROBLEM
STUDY
INFLATION – Definition
Chapter
Inflation is an economic concept. It may be defined as sustained increase in
1
the general level of prices for goods and services. It is measured as an annual
percentage increase. This results in overall upward price movement of goods and
services in an economy, usually as measured by the Consumer Price Index and
Wholesale Price Index. Over time, as the cost of goods and services increase, the
value of a money unit (dollar/rupee…) falls because a person won’t be able to
purchase as much with that sum as he/she previously could. Consequently,
inflation is also erosion in the purchasing power of money – a loss of real value in
the internal medium of exchange and unit of account in the economy.

The term inflation may also be used to describe the rising level of prices in a
narrow set of assets, goods or services within the economy, such as commodities
(which include food, fuel, metals), financial assets (such as stocks, bonds and real
estate), and services (such as entertainment and health care).

The impact of inflation is that, inflation makes rich richer and poor
poorer.

Economists generally agree that high rates of inflation and hyperinflation are
caused by an excessive growth of money supply. But low or moderate inflation
may be attributed to fluctuations in real demand for goods and services, or changes
in available supplies such as during scarcities. However, the consensus view is
that a long sustained period of inflation is caused by money supply growing faster
than the rate of economic growth.

Today, most mainstream economists favor a low steady rate of inflation.

Low (as opposed to zero or negative) inflation may reduce the severity of
economic recessions by enabling the labor market to adjust more quickly in a
downturn, and reduce the risk that a liquidity trap prevents monetary policy from
stabilizing the economy. The task of keeping the rate of inflation low and stable is
usually given to monetary authorities. Generally, these monetary authorities are the
central banks (Reserve Bank of India (RBI)- in case of India ) that control the size
of the money supply through the setting of interest rates, through open market
operations, and through the setting of banking reserve requirements.
FORMS OF INFLATION
Chapter
2
Inflation comes in different forms and those at are familiar with the economic
matters would observe that there are trends in the way that prices are moving
gradual and irregular in relation to aggregate sections of the economy. This suggest
that there is more than one factor that causes inflation and as different sections of
the economy develop it gives rise to different types inflationary periods. The main
causes of inflation are:

− Demand-pull Inflation
− Cost push Inflation
− Monetary inflation
− Structural inflation
− Imported inflation

Demand pull inflation

Demand-pull inflation occurs when the consumers, businesses or the governments’
demand for goods and services exceed the supply; therefore the cost of the item
rises, unless supply is perfectly elastic. Because we do not live in a perfect market
supply is somewhat inelastic and the supply of goods and services can only be
increased if the factors of production are increased.

The increase in demand is created from an increase in other areas, such as the
supply of money, the increase of wages which would then give rise in disposable
income, and once the consumers have more disposal income this would lead to
aggregate spending.

As a result of the aggregate spending there would also be an increase in demand

for exports and possible hoarding and profiteering from producers. The excessive
demand, the prices of final goods and services would be forced to increase and this
increase gives rise to inflation.
Cost push inflation
Cost-push inflation is caused by an increase in production costs. It is generally
caused by an increase in wages or an increase in the profit margins of the
entrepreneurs.

When wages are increased, this causes the business owner to in turn increase the
price of final goods and services which would be passed onto the consumers and
the same consumers are also the employees. As a result of the increase in prices for
final goods and services the employees realize that their income is insufficient to
meet their standard of living because the basic cost of living has increased. The
trade unions then act as the mediator for the employees and negotiate better wages
and conditions of employment. If the negotiations are successful and the
employees are given the requested wage increase this would further affect the
prices of goods and services and invariably affected.

On the other hand, when firms attempt to increase their profit margins by making
the prices more responsive to supply of a good or service instead of the demand for
that said good or service. This is usually done regardless to the state of the
economy. This can be seen in monopolistic economies where the firm is the only
supplier or by entrepreneurs that are seeking a larger profit for their own self
interests.

Interaction between Cost Push Inflation and Demand

Pull Inflation
Monetary inflation
Monetary inflation occurs when there is an excessive supply of money. It is
understood that the government increases the money supply faster than the quantity
of goods increases, which results in inflation. Interestingly as the supply of goods
increase the money supply has to increase or else prices actually go down.

When a dollar is worth less because the supply of dollars has increased, all
businesses are forced to raise prices just to get the same value for their products.

Structural inflation
Planned inflation that is caused by a government's monetary policy is called
structural inflation. This type of inflation is not caused by the excess of demand or
supply but is built into an economy due to the government’s monetary policy.

In developed countries they are characterized by a lack of adequate resources like

capital, foreign exchange, land and infrastructure. Furthermore, over-population
with the majority depending on agriculture for their livelihood means that there is a
fragmentation of the land holdings. There are other institutional factors like land-
ownership, technological backwardness and low rate of investment in agriculture.
These features are typical of the developing economies. For example, in
developing country where the majority of the population lives in the rural areas and
depends on agriculture and the government implements a new industry, some
people get employment outside the agricultural sector and settle down in urban
areas. Because there might be an unequal distribution of land ownership and
tenancy, technological backwardness and low rates of investments in agriculture
inclusive of inadequate growth of the domestic supply of food which corresponds
with an increase in demand arising from increasing urbanization and population
prices increase.

Food being the key wage-good, an increase in its price tends to raise other prices as
well. Therefore, some economists consider food prices to be the major factor,
which leads to inflation in the developing economies.

Imported inflation
Another type of inflation is imported inflation. This occurs when the inflation of
goods and services from foreign countries that are experiencing inflation are
imported and the increase in prices for that imported good or service will directly
affect the cost of living. Another way imported inflation can add to our inflation
rate is when overseas firms increase their prices and we pay more for our goods
increasing our own inflation.
 Inflation – How is it measured?
Chapter
3
The rate of inflation is high if the prices are rising by 7%-8% or more and
low if the prices are rising at 2%-3%. India uses the Wholesale Price Index (WPI)
to calculate and then decide the inflation rate in the economy.

The Wholesale Price Index is the price of a representative basket of

wholesale goods. Some countries use the changes in this index to measure inflation
in their economies, in particular India – The Indian WPI figure is released every 10
days and influences stock and fixed price markets. The Wholesale Price Index
focuses on the price of goods traded between corporations, rather than goods
bought by consumers, which is measured by the Consumer Price Index. The
purpose of the WPI is to monitor price movements that reflect supply and demand
in industry, manufacturing and construction. This helps in analyzing both
macroeconomic and microeconomic conditions.

Calculation:
I. WPI
The wholesale price index consists of over 2,400 commodities. The indicator
tracks the price movement of each commodity individually. Based on this
individual movement, the WPI is determined through the averaging principle.

In this method, a set of 435 commodities and their price changes are used for
the calculation. The selected commodities are supposed to represent various strata
of the economy and are supposed to give a comprehensive WPI value for the
economy.

WPI is calculated on a base year and WPI for the base year is assumed to be 100.
To show the calculation, let’s assume the base year to be 1970. The data of
wholesale prices of all the 435 commodities in the base year and the time for which
WPI is to be calculated is gathered.

Let's calculate WPI for the year 1980 for a particular commodity, say wheat.
Assume that the price of a kilogram of wheat in 1970 = Rs 5.75 and in 1980 = Rs
6.10

The WPI of wheat for the year 1980 is,

(Price of Wheat in 1980 – Price of Wheat in 1970)/ Price of Wheat in 1970 x 100

i.e. (6.10 – 5.75)/5.75 x 100 = 6.09

Since WPI for the base year is assumed as 100, WPI for 1980 will become 100 +
6.09 = 106.09.

In this way individual WPI values for the remaining 434 commodities are
calculated and then the weighted average of individual WPI figures are found out
to arrive at the overall Wholesale Price Index. Commodities are given weight-age
depending upon its influence in the economy.

II. Inflation Rate

If we have the WPI values of two time zones, say, beginning and end of
year, the inflation rate for the year will be,

(WPI of end of year – WPI of beginning of year)/WPI of beginning of year x 100

For example, WPI on Jan 1st 1980 is 106.09 and WPI of Jan 1st 1981 is 109.72
then inflation rate for the year 1981 is,

(109.72 – 106.09)/106.09 x 100 = 3.42% and we say the inflation rate for the year
1981 is 3.42%.

Since WPI figures are available every week, inflation for a particular week (which
usually means inflation for a period of one year ended on the given week) is
calculated based on the above method using WPI of the given week and WPI of the
week one year before. This is how we get weekly inflation rates in India.
Inflation – How is it caused?
Chapter
4
When the government of a country print currency in excess the prices of products
increase to balance with the increase in currency, this also leads to inflation.

Increase in production and labor costs, have a direct impact on the price of the
final product, resulting in inflation.

When countries borrow money, they have to cope with the interest burden. This
interest burden results in inflation.

High taxes on consumer products, can also lead to inflation.

Demands pull inflation, wherein the economy demands more goods and services
than what is produced.

Cost push inflation or supply shock inflation, wherein non availability of a

commodity would lead to increase in prices.
Problems due to inflation Chapter 5
When the balance between supply and demand goes out of control, consumers
could change their buying habits, forcing manufacturers to cut down
production.

The mortgage crisis of 2007 in USA could best illustrate the ill effects of
inflation. Housing prices increases substantially from 2002 onwards, resulting
in a dramatic decrease in demand.

Inflation can create major problems in the economy. Price increase can worsen
the poverty affecting low income household.

Inflation creates economic uncertainty and is a dampener to the investment

climate slowing growth and finally it reduce savings and thereby consumption.

The producers would not be able to control the cost of raw material and labor
and hence the price of the final product. This could result in less profit or in
some extreme case no profit, forcing them out of business.

Manufacturers would not have an incentive to invest in new equipment and

new technology.

Uncertainty would force people to withdraw money from the bank and convert
it into product with long lasting value like gold, artifacts.
 6
Chapter
Methods to control inflation

A high inflation rate is undesirable because it has negative consequences.

However, the remedy for such inflation depends on the cause. Therefore,
government must diagnose its causes before implementing policies.

Monetary Policy
Inflation is primarily a monetary phenomenon. Hence, the most logical solution to
check inflation is to check the flow of money supply by devising appropriate
monetary policy and carefully implementing such measures. To control inflation, it
is necessary to control total expenditures because under conditions of full
employment, increase in total expenditures will be reflected in a general rise in
prices, that is, inflation. Monetary policy is used to control inflation and is based
on the assumption that a rise in prices is due to excess of monetary demand for
goods and services by the consumers/households e because easy bank credit is
available to them. Monetary policy, thus, pertains to banking and credit availability
of loans to firms and households, interest rates, public debt and its management,
and the monetary standard. Monetary management is aimed at the commercial
banking systems, and through this action, its effects are primarily felt in the
economy as a whole. By directly affecting the volume of cash reserves of the
banks, can regulate the supply of money and credit in the economy, thereby
influencing the structure of interest rates and the availability of credit. Both these,
factors affect the components of aggregate demand and the flow of expenditure in
the economy.
The central bank’s monetary management methods, the devices for decreasing or
increasing the supply of money and credit for monetary stability is called monetary
policy. Central banks generally use the three quantitative measures to control the
volume of credit in an economy, namely:

1. Raising bank rates

2. Open market operations and
3. Variable reserve ratio
However, there are various limitations on the effective working of the quantitative
measures of credit control adapted by the central banks and, to that extent,
monetary measures to control inflation are weakened. In fact, in controlling
inflation moderate monetary measures, by themselves, are relatively ineffective.
On the other hand, drastic monetary measures are not good for the economic
system because they may easily send the economy into a decline.

In a developing economy there is always an increasing need for credit. Growth

requires credit expansion but to check inflation, there is need to contract credit. In
such a encounter, the best course is to resort to credit control, restricting the flow
of credit into the unproductive, inflation-infected sectors and speculative activities,
and diversifying the flow of credit towards the most desirable needs of productive
and growth-inducing sector.

It should be noted that the impression that the rate of spending can be controlled
rigorously by the contraction of credit or money supply is wrong in the context of
modern economic societies. In modern community, tangible, wealth is typically
represented by claims in the form of securities, bonds, etc., or near moneys, as they
are called. Such near moneys are highly liquid assets, and they are very close to
being money. They increase the general liquidity of the economy. In these
circumstances, it is not so simple to control the rate of spending or total outlays
merely by controlling the quantity of money. Thus, there is no immediate and
direct relationship between money supply and the price level, as is normally
conceived by the traditional quantity theories.

When there is inflation in an economy, monetary restraints can, in conjunction

with other measures, play a useful role in controlling inflation.

Fiscal measures
Fiscal policy is another type of budgetary policy in relation to taxation, public
borrowing, and public expenditure. To curve the effects of inflation and changes in
the total expenditure, fiscal measures would have to be implemented which
involves an increase in taxation and decrease in government spending. During
inflationary periods the government is supposed to counteract an increase in
private spending. It can be cleared noted that during a period of full employment
inflation, the aggregate demand in relation to the limited supply of goods and
services is reduced to the extent that government expenditures are shortened.

Along with public expenditure, governments must simultaneously increase taxes

that would effectively reduce private expenditure, in an effect to minimise
inflationary pressures. It is known that when more taxes are imposed, the size of
the disposable income diminishes, also the magnitude of the inflationary gap in
regards to the availability of the supply of goods and services.

In some instances, tax policy has been directed towards restricting demand without
restricting level of production. For example, excise duties or sales tax on various
commodities may take away the buying power from the consumer goods market
without discouraging the level of production. However, some economists point out
that this is not a correct way of combating inflation because it may lead to a
regressive status within the economy.

As a result, this may lead to a further rise in prices of goods and services, and
inflation can spread from one sector of the economy to another and from one type
of goods and services to another.

Therefore, a reduction in public expenditure, and an increase in taxes produces a

cash surplus in the budget. Keynes, however, suggested a programme of
compulsory savings, such as deferred pay as an anti-inflationary measure. Deferred
pay indicates that the consumer defers a part of his or her wages by buying savings
bonds (which, of course, is a sort of public borrowing), which are redeemable after
a particular period of time, this is sometimes called forced savings.

Additionally, private savings have a strong disinflationary effect on the economy

and an increase in these is an important measure for controlling inflation.
Government policy should therefore, include devices for increasing savings. A
strong savings drive reduces the spendable income of the consumers, without any
harmful effects of any kind that are associated with higher taxation.

Furthermore, the effects of a large deficit budget, which is mainly responsible for
inflation, can be partially offset by covering the deficit through public borrowings.
It should be noted that it is only government borrowing from non-bank lenders that
has a disinflationary effect. In addition, public debt may be managed in such a way
that the supply of money in the country may be controlled. The government should
avoid paying back any of its past loans during inflationary periods, in order to
prevent an increase in the circulation of money. Anti-inflationary debt management
also includes cancellation of public debt held by the central bank out of a
budgetary surplus.
Fiscal policy by itself may not be very effective in combating inflation; therefore a
combination of fiscal and monetary tools can work together in achieving the
desired outcome.

Direct measures of control

Direct controls refer to the regulatory measures undertaken to convert an open
inflation into a repressed one.

Such regulatory measures involve the use of direct control on prices and rationing
of scarce goods. The function of price control is a fix a legal ceiling, beyond which
prices of particular goods may not increase. When ceiling prices are fixed and
enforced, it means prices are not allowed to rise further and so, inflation is
suppressed.

Under price control, producers cannot raise the price beyond a specified level, even
though there may be a pressure of excessive demand forcing it up. For example,
during wartimes, price control was used to suppress inflation.

In times of the severe scarcity of certain goods, particularly, food grains,

government may have to enforce rationing, along with price control. The main
function of rationing is to divert consumption from those commodities whose
supply needs to be restricted for some special reasons; such as, to make the
commodity more available to a larger number of households. Therefore, rationing
becomes essential when necessities, such as food grains, are relatively scarce.
Rationing has the effect of limiting the variety of quantity of goods available for
the good cause of price stability and distributive impartiality. However, according
to Keynes, “rationing involves a great deal of waste, both of resources and of
employment.”
Another control measure that was suggested is the control of wages as it often
becomes necessary in order to stop a wage-price spiral. During galloping inflation,
it may be necessary to apply a wage-profit freeze. Ceilings on wages and profits
keep down disposable income and, therefore the total effective demand for goods
and services.

On the other hand, restrictions on imports may also help to increase supplies of
essential commodities and ease the inflationary pressure. However, this is possible
only to a limited extent, depending upon the balance of payments situation.
Similarly, exports may also be reduced in an effort to increase the availability of
the domestic supply of essential commodities so that inflation is eased. But a
country with a deficit balance of payments cannot dare to cut exports and increase
imports, because the remedy will be worse than the disease itself.

In overpopulated countries like India, it is also essential to check the growth of the
population through an effective family planning programme, because this will help
in reducing the increasing pressure on the general demand for goods and services.
Again, the supply of real goods should be increased by producing more. Without
increasing production, inflation just cannot be controlled.

Some economists have even suggested indexing in order to minimise certain ill-
effects of inflation. Indexing refers to monetary corrections through periodic
adjustments in money incomes of the people and in the values of financial assets
such as savings deposits, which are held by them in relation to the degrees of price
rise. Basically, if the annual price were to rise to 20%, the money incomes and
values of financial assets are enhanced by 20%, under the system of indexing.
Hyperinflation, Disinflation and Deflation
Chapter
7
Hyperinflation, Disinflation and Deflation are the three important terms coming in
the subject of inflation. Even though they look similar, in economic terms they
represent three different phenomenons.

Hyperinflation
It is an out of control inflation were prices are increasing rapidly in an alarming
rate as a currency losses its value.
Most economists define hyperinflation as “an inflationary cycle without any
equilibrium”.

When associated with depressions, hyperinflation often occurs when there is a

large increase in the money supply not supported by gross domestic product (GDP)
growth, resulting in an imbalance in the supply and demand for the money. Left
unchecked this causes prices to increase, as the currency loses its value.

When associated with wars, hyperinflation often occurs when there is a loss of
confidence in a currency's ability to maintain its value in the aftermath. Because of
this, sellers demand a risk premium to accept the currency, and they do this by
raising their prices.

Disinflation

It is a decrease in the rate of inflation. It is a slowdown in the increase of the

general price level of goods and services over time. If the inflation rate is not very
high to start with, disinflation can lead to deflation.

For example if the annual inflation rate of a month is 5% and it is 4% the following
month, then the prices are disinflated by 1% but are still increasing at a 4%
annual rate.
Disinflation is lower inflation. During the occurrence of phenomenon the prices are
still going up but in a lower rate. The general price level still rises, but, a slower
rate resulting in a continued, but, lower rate of real value destruction in money and
other monetary items.

Deflation or Negative Inflation

Deflation is a decrease in the general price level of goods and services. Deflation
occurs when the inflation rate falls below zero percent (a negative inflation rate),
resulting in an increase in the real value of money allowing one to buy more goods
with a unit of money (dollar, rupee…)than earlier.

This phenomenon is also called Negative Inflation. Low inflation does not mean
that prices will remain low: it means that prices are rising at a slower pace than
before. When the inflation rate is negative, the economy is in said to be in a
deflationary period. This is when there is less money (supply of money) chasing
the same amount of goods and services, leading to the increase in the value of the
money.

Term Explanation
Hyperinflation Inflation in a very high rate.

Disinflation Decrease in the rate of Inflation.

Deflation Negative inflation.

 PROBLEM ANALYSIS

To analyse the problem of inflation and how it affects common

people we have prepared two questionnaires. One is for consumers and
the other for traders. We have collected information from ten consumers
of various class of society and ten traders. The most suitable five
questionnaires each have been attached to the report.
For further analysis we have found out prices of various
components in different months and represented it graphically in the
report, from which we can clearly understand the trend of inflation.
The data used for analysis are primary data collected directly from
informants. So the data may be biased. Hence there will be slight
variations in the rates and other values included for analyzing.
Quesetionnaire to the Comsumers on Effect of
Inflation
1. Head of the Family:

2. No of Family Members:

Name Relation to Male Education Occupation Monthly

Family Head /Female Income

3. Monthly income of the family:

4. Financial Status of the family:

• Poor (monthly income below Rs 6,000/-)
• Middle Class (monthly income Rs 6,000 - Rs15,000)
• Rich (monthly income above Rs 15,000/-)
5. Expense of the family :

6. Increment in monthly expense:

• Increases every month:
• Increases occasionally:
• No Increase:
7. Decrement in monthly expense:
• Decreases every month:
• Decreases occasionally:
• No Decrease:

8. Does Price Rise (inflation) is noticed? Yes No

9. Goods affected most by Price Rise?

• Food Products
• Manufactured Products
• Fuel and Power Products

10. Price Rise affects most during?

• Festival Season
• Ordinary week days

11. Comment on the price rise during recent Onam / Ramzan /

Christmas season?
• Slight rice
• Affordable rise
• Un affordable rise

12. Whether price rise had compelled you to change the regular brand
of product you use to a cheaper one?
Yes No

13. Whether price rise had brought notable change in the life style of
the family?
Yes No

14. Does price rise have limited the purchasing power of the family?
Yes No

15. Write about the price rise in less than 30 words?

Quesetionnaire to the Comsumers on Effect of
Inflation
1. Head of the Family:

2. No of Family Members:

Name Relation to Male Education Occupation Monthly

Family Head /Female Income

3. Monthly income of the family:

4. Financial Status of the family:

• Poor (monthly income below Rs 6,000/-)
• Middle Class (monthly income Rs 6,000 - Rs15,000)
• Rich (monthly income above Rs 15,000/-)
5. Expense of the family :

6. Increment in monthly expense:

• Increases every month:
• Increases occasionally:
• No Increase:
7. Decrement in monthly expense:
• Decreases every month:
• Decreases occasionally:
• No Decrease:

8. Does Price Rise (inflation) is noticed? Yes No

9. Goods affected most by Price Rise?

• Food Products
• Manufactured Products
• Fuel and Power Products

10. Price Rise affects most during?

• Festival Season
• Ordinary week days

11. Comment on the price rise during recent Onam / Ramzan /

Christmas season?
• Slight rice
• Affordable rise
• Un affordable rise

12. Whether price rise had compelled you to change the regular
brand of product you use to a cheaper one?
Yes No

13. Whether price rise had brought notable change in the life style of
the family?
Yes No

14. Does price rise have limited the purchasing power of the family?
Yes No

15. Write about the price rise in less than 30 words?

Quesetionnaire to the Comsumers on Effect of
Inflation
1. Head of the Family:

2. No of Family Members:

Name Relation to Male Education Occupation Monthly

Family Head /Female Income

3. Monthly income of the family:

4. Financial Status of the family:

• Poor (monthly income below Rs 6,000/-)
• Middle Class (monthly income Rs 6,000 - Rs15,000)
• Rich (monthly income above Rs 15,000/-)
5. Expense of the family :

6. Increment in monthly expense:

• Increases every month:
• Increases occasionally:
• No Increase:
7. Decrement in monthly expense:
• Decreases every month:
• Decreases occasionally:
• No Decrease:

8. Does Price Rise (inflation) is noticed? Yes No

9. Goods affected most by Price Rise?

• Food Products
• Manufactured Products
• Fuel and Power Products

10. Price Rise affects most during?

• Festival Season
• Ordinary week days

11. Comment on the price rise during recent Onam / Ramzan /

Christmas season?
• Slight rice
• Affordable rise
• Un affordable rise

12. Whether price rise had compelled you to change the regular brand
of product you use to a cheaper one?
Yes No

13. Whether price rise had brought notable change in the life style of
the family?
Yes No

14. Does price rise have limited the purchasing power of the family?
Yes No

15. Write about the price rise in less than 30 words?

Quesetionnaire to the Traders on Effect of
Inflation
1. Name of the trader:

2. Name and address of the enterprise :

3. Goods in which the enterprise deals with:

• Grocery
• Vegetables and fruits
• Meat
• Fuel
• Hard ware

4. Comparison of rate of 5 items with their previous month rate:

Name of the Item Present Rate Previous Rate

( ) ( )

5. In comparison of 5 items majority’s price has:

• Increased
• Decreased

6. Does such price rise happen regularly?

Yes No
7. Whether price rise has decreased the sale of that product?
Yes No

8. Whether cheap products are in more demand compared to

expensive products?
Yes No

9. Whether inflation affects overall business of the enterprise?

Yes No

10. Whether price of goods go down?

Yes No

11. Price rise is due to:

• Demand
• Availability
• Production cost
• Other reasons

12. Whether price rise during seasons?

Yes No
Quesetionnaire to the Traders on Effect of
Inflation
1. Name of the trader:

2. Name and address of the enterprise :

3. Goods in which the enterprise deals with:

• Grocery
• Vegetables and fruits
• Meat
• Fuel
• Hard ware

4. Comparison of rate of 5 items with their previous month rate:

Name of the Item Present Rate Previous Rate

( ) ( )

5. In comparison of 5 items majority’s price has:

• Increased
• Decreased

6. Does such price rise happen regularly?

Yes No
7. Whether price rise has decreased the sale of that product?
Yes No

8. Whether cheap products are in more demand compared to

expensive products?
Yes No

9. Whether inflation affects overall business of the enterprise?

Yes No

10. Whether price of goods go down?

Yes No

11. Price rise is due to:

• Demand
• Availability
• Production cost
• Other reasons

12. Whether price rise during seasons?

Yes No
Quesetionnaire to the Traders on Effect of
Inflation
1. Name of the trader:

2. Name and address of the enterprise :

3. Goods in which the enterprise deals with:

• Grocery
• Vegetables and fruits
• Meat
• Fuel
• Hard ware

4. Comparison of rate of 5 items with their previous month rate:

Name of the Item Present Rate Previous Rate

( ) ( )

5. In comparison of 5 items majority’s price has:

• Increased
• Decreased

6. Does such price rise happen regularly?

Yes No
7. Whether price rise has decreased the sale of that product?
Yes No

8. Whether cheap products are in more demand compared to

expensive products?
Yes No

9. Whether inflation affects overall business of the enterprise?

Yes No

10. Whether price of goods go down?

Yes No

11. Price rise is due to:

• Demand
• Availability
• Production cost
• Other reasons

12. Whether price rise during seasons?

Yes No
 Diagrams Representing Inflation

Date Food Meat Diary Cereals Oils Sugar

Price Price Price Price Price Price
Index Index Index Index Index Index
01/2009 143.6 118.9 122.2 184.6 133.6 177.5
02/2009 139.0 114.2 114.3 177.4 131.0 187.7
03/2009 139.7 114.6 117.7 177.8 128.8 190.2
04/2009 142.8 114.5 117.4 179.0 147.1 193.7
05/2009 152.3 118.5 123.7 185.5 166.9 227.8
06/2009 151.2 117.7 122.8 185.4 159.6 233.1
07/2009 147.1 119.4 125.9 167.1 143.7 261.5
08/2009 152.2 119.3 129.3 162.1 156.3 318.4
09/2009 152.8 118.4 144.0 157.7 149.6 326.9
10/2009 156.8 117.0 157.5 166.1 151.7 321.3
11/2009 168.3 119.1 208.1 171.0 161.7 315.9
12/2009 172.0 119.2 215.6 170.9 169.3 334.0
01/2010 172.4 119.1 202.0 170.1 168.8 375.8
02/2010 169.4 123.5 191.4 164.1 169.2 360.3

Monthly food price index

Food Price Inflation Stabilizing
NEWS PAPER REPORTS
 LIMITATIONS OF THE STUDY

• Public answers were biased.

• It was very time consuming.
• Public was not ready to reveal true facts.
• Traders and merchants did not respond
positively.
• It was difficult to collect proofs.
• Consumers were non-cooperative.
Bibiliography

• The Economic Times, The Times Of India

• Deccan Herald, Business Line, The Hindu
• Web Sites
• Encyclopedia
• Magazines – The Week, Frontline
THE END