Inflation is also taking the form of an epidemic in a way. Many big countries around the world including india have come under its grip and the effect of the wild increase in the prices of products is also visible in private consumption. In such a situation, inflation is affecting the economy along with the employed and investors.
Not only the common man is troubled by inflation, but the entire economy becomes sluggish due to its pressure. Inflation is no less than an epidemic, as it leads to a major decline in private consumption, which ultimately affects employment and production. If the effect of inflation remains for a long time, then the pace of the economy may also slow down. Currently, India's retail inflation rate is 6.95 percent, which is the highest in 17 months.
Effect of inflation on the employed
Government and private sector employers increase Dearness Allowance (DA) to their employees to protect them from the effects of inflation. Almost all the employees working in the organized sector get the benefit of dearness allowance and their purchasing power is increased by increasing their salary. However, those working in the unorganized sector have to deal with inflation. In such a situation, the effect of inflation on the purchasing power of the employees who get the benefit of DA is not visible.
Inflation is good for investors too
If the inflation rate remains in the range of 4-5 percent, then it proves to be effective in increasing the economy rapidly. Salaried class gets allowance relative to inflation, which does not affect their consumption much. During this, the earnings of companies also increase and the market value also increases with their stock. Investors get the direct benefit of this, which encourages them to invest more money.
serious impact on the economy
If the rate of inflation goes out of the range, then it can have a serious impact on the economy. This will reduce private consumption, which will affect the margins of the companies and will also lead to a fall in production. This is the reason that the Reserve bank has reduced the growth rate estimate in the decisions of the Monetary Policy Committee released in the first week of April.
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