inflation in paksitan as per 2011

1. Inflation
Ahmed Butt

2.  Inflation is the state when the
value of money is falling and
there is an upward rise in
price level.
 Too much of money chasing, but
very few goods.
 For example, if the inflation rate
is 5% for a particular item, it
means that the demand is 5% more
than the total supply of that
particular item.

3. Types of inflation
Demand pull Inflation .
Cost push inflation.
Pricing power inflation.
Skew inflation .

4. Demand pull inflation
When demand grows faster
than supply it pushes
general prices up. This can
be described as “too much
money chasing too few
goods”.

6. Cost push inflation
Cost-push inflation is a type
of inflation caused by
substantial increases in the
cost of Important goods or
services where no suitable
alternative is available.

8. Pricing power inflation
This type of inflation is
caused by business houses who
tend to increase prices to
increase their profit margins. It
is more common in oligopolistic
economies.
skew inflation
This term has been coined
observing the unusual inflation
where in there was huge
inflation in the food sector
with the non-food sector
remaining more or less

9. Factors affecting inflation
 Increase in money supply.
 Increase in exports.
 Black money.(fake currency).
 Increase in public expenditure
 Decrease in the aggregate supply of
goods and services.

10. A measure of price changes in consumer goods and
services such as gasoline,food,clothing and automobiles.
the CPI measures price change from the perspective of a
consumer.
A family of indexes that measure the average change over
time in selling prices by domestic producers of goods and
services. PPI measures price change from the perspective
of a seller

11. How to control inflation??

12. Problems due to inflation
When the balance between supply and demand
Goes out of control, consumers could change their
buying habits, forcing manufacturers to cut down
production.
Price increase can worsen the poverty affecting
the low income household
Producers will not be able to control the cost of raw
material and labor and hence the price of the final
product, which results in less profit or in some cases
no profit, forcing them out of business
Manufactures will not have an incentive to invest in
new equipment and technology

13. How inflation is a threat to pakistan
economy

14. CONCLUSION
 Monetary policy has to be forward-
looking to achieve its inflation target.
Current monetary conditions impact
inflation with a lag of around 12 months
in Pakistan. Therefore, the SBP should
set monetary policy today with a view to
meeting its inflation target around one
year from now.