Inflation is the parent of unemployment and the unseen robber of those who have saved. ‘Margaret Thatcher.’
James Cook also said, ‘Inflation makes the wealthiest people richer and the masses poorer.’
Milton Friedman defines inflation as a taxation without legislation.
Inflation is the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country.
The process whereby the price of biscuits is increased from #50 to #100 is called inflation. It happens without informing anyone.It happened overnight; suddenly, the price increased.
Inflation is said to be a general increase in the prices of goods and services in an economy. This is usually measured using the consumer price index (CPI).
Increased costs, including wages, government policies, devaluation and revaluation of the dollar, all play a big role in inflation. Inflation is caused because we place more value on something.
Let’s see the causes of inflation together.
Demand-pull
The most common cause for a rise in prices is when more buyers want a product or service than the seller has available. It’s interesting because, unless there’s a reason the supply is diminished that affects cost, the price doesn’t have to increase. It rises because sellers recognize that buyers are willing to pay more if it’s something they really want. Let’s take a look at the bag of rice as an example, rice is a common food eaten by all Nigerians almost every day, and in every occasion, rice is served to people. Because of this, rice increases every day in the country.
Increased money supply;
Ideally, an increase in the supply of money in the economy lowers interest rates which encourages spending and investment and helps to grow gross. This happened during the COVID-19 pandemic. Governments worldwide, including the US, began massive financial support programs including $1 trillion in cash to Americans. This influx of money in the economy increased demand for goods and for a variety of reasons, businesses could not keep up. What a shame!!!
How does inflation affect consumers? How does inflation affect us?
When prices are rising quickly, many of us consciously – or subconsciously – make different choices in our lives. We revisit our budgets, cut our discretionary spending, and make personal sacrifices to make sure we can afford what we need. These small changes amount to big decisions, like renting instead of buying a house, choosing one job over the other, or moving cities for better opportunities.
Suddenly, your life looks dramatically different just to survive.
Due to lack of provision from parents to children, young teenagers intend to make some nasty decisions in order to survive and not go hungry.
Inflation, on the other hand, is hard to control. When the price of an item increases, it is likely not to return to the actual price.
Karl Otto Pohl said inflation is like toothpaste. Once it’s out, you can hardly get it back in. Interesting.
Why researching, i came across some ways in which inflation can be controlled.
Which are;
– Promote work,
– Savings, and investment
– Increased labour supply,
– Capital supply,
– Productivity, and personal savings can help to reduce inflationary pressures.
The Nigerian government and indeed her people tend to focus only on ‘graduate’ unemployment’ but usually, that is like treating symptoms because we intend to forget those that didn’t have the chance to further their education or wasn’t given the chance to school especially the northeners.
Governments through fiscal policy, however, can assist in fighting inflation in the country .
Governments can reduce spending and increase taxes as a way to help reduce inflation in the country.
