http://online.wsj.com/news/articles/SB10001424052702303932504579254214290446386
Over the past year, India has been raising its rate of inflation in order to expand its economy, but this method is starting to become a real issue. The reason for this is that many Indian workers live near or below the poverty line, and their wages are not increasing fast enough to keep up with this rising inflation. As a result, these workers are having more and more trouble purchasing basic necessities, which is causing harm for the economy.
Retail inflation, measured by the Consumer Price Index, has risen all the way to 11.24% in November, which was higher than expected and unanticipated as well. In my opinion, India should attempt to curb its inflation and maintain steadier levels of inflation for the time being in order to alleviate economic pressure on its impoverished workers. Also, a steadier rate of inflation will ensure steadier economic growth.
Friday, December 13, 2013
Inflation Still Low as Wholesale Prices Fall for 3rd Straight Month
http://www.latimes.com/business/money/la-fi-mo-producer-prices-inflation-wholesale-economy-20131213,0,6458844.story
In the past several months, the rate of inflation has fallen to 0.7%, which is a very manageable rate. This is due to the fact that the Consumer Price Index has fallen as well, which some are speculating is a result of lower energy prices in the Energy Price Index. The affect of lower energy prices certainly could affect the Consumer Price Index, which could mean that the current rate of inflation is artificially low. In any case, the current rate of inflation is very low, which probably coincides with the still relatively high unemployment rates, which do not include those who have stopped looking for work.
Because the Federal Reserve has kept interest rates so low for the past several years, it is not a surprise that inflation is falling. However, this has not helped the unemployment rate to fall back to the normal levels it saw before the housing market crash in 2008. Keep in mind that the Phillip's curve demonstrates that as inflation rises, unemployment drops. If the Federal Reserve wants to actually help unemployment return to normal levels and aid the economy, it should raise interest rates to effectively increase inflation to higher rate than 0.7%, which is not enough to jumpstart our economy.
In the past several months, the rate of inflation has fallen to 0.7%, which is a very manageable rate. This is due to the fact that the Consumer Price Index has fallen as well, which some are speculating is a result of lower energy prices in the Energy Price Index. The affect of lower energy prices certainly could affect the Consumer Price Index, which could mean that the current rate of inflation is artificially low. In any case, the current rate of inflation is very low, which probably coincides with the still relatively high unemployment rates, which do not include those who have stopped looking for work.
Because the Federal Reserve has kept interest rates so low for the past several years, it is not a surprise that inflation is falling. However, this has not helped the unemployment rate to fall back to the normal levels it saw before the housing market crash in 2008. Keep in mind that the Phillip's curve demonstrates that as inflation rises, unemployment drops. If the Federal Reserve wants to actually help unemployment return to normal levels and aid the economy, it should raise interest rates to effectively increase inflation to higher rate than 0.7%, which is not enough to jumpstart our economy.
Subscribe to:
Comments (Atom)