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International Inflation

By Maya Broacha

The rate of inflation has rapidly increased internationally. The recent increase in inflation looks to be fundamentally different from previous times of inflation that was more directly linked to the regular business cycle. Continued disruptions in global supply chains due to the coronavirus pandemic, labour market turmoil, the fact that today's prices are being compared to prices during last year's COVID-19-induced shutdowns, and strong consumer demand after local economies were reopened have paved the way for international inflation.

Inflation is the sustained upward movement in the overall price level of goods and services in an economy. Inflation is a simple but complicated issue; the amount of capital a country has is fixed thus, when excess money is printed, it devalues the currency. Inflation is a major issue among the general public since you earn the same amount of money but your spending increases. Inflation has a nasty habit of increasing. A person may earn 1000 rupees a day and spend 500 rupees a day on needs like services and products, but inflation will rise. The issue is that the value of 1000 rupees will remain constant but the amount of money spent on needs per day will continue to rise. In a nutshell, when your earnings don't keep up with rising prices, you become a victim of inflation.

Inflation has many causes both nationally and internationally, but they can all be traced back to three major themes: political, social, and economic. For example, the ongoing war between Russia and Ukraine raises crude oil prices, which has a cascading effect on all of the world's countries that are connected and reliant on one another in terms of trade, commerce, goods, and services. By domino effect, for example, Russia controls a large portion of crude oil delivery; when this becomes unavailable, the product becomes scarce and less becomes more. This suggests that obtaining something costs more when there is less of it. The lower the supply, the higher the demand.

Nevertheless, inflation goes both ways, it increases but can also decrease. From time to time with new government policies and new technology, breakthrough agreements between countries and other such positive factors.

Retail inflation increased in India to 4.91% year over year in November, up from 4.48% in October 2021. One of the biggest products that inflation has infected is fuel and light. On a year-over-year basis, fuel and light inflation fell to 10.95%. It had risen to 13.35% in November 2021 from 14.35% in October.

In conclusion, it is not all gloom and doom; we have seen inflation lead to recessions such as the 1929 Wall Street crash and the recent global recession of 2007-08, but the same negative elements may be overcome. War, for example, can be followed by peace. Drought and famine can be followed by abundance; science and technology can propel an economy forward at breakneck speed, and wise and visionary government actions and agreements can go a long way to stem the tide. As the old adage says, what goes up must come down.


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