“Inflation” in simple words is the progressive increase in the price of general goods and services, in the economy.
The purchasing power of money is the number of goods and services that can be bought with a monetary unit. Inflation further leads to a decrease in the purchasing power of money.
Lets understand this with an example: Rs.100 was put away on a shelf, what would happen to the money after a year? Yes! It would be the same. But it would buy lesser goods and services than what it would have a year back as all goods and services would have become more expensive after a year.
It means that in comparison today to that of last year is a function of how expensive goods and services have become over the period. Which in turn is a function of inducing inflation rate in the economy.
Wholesale Price Index (WPI) and Consumer Price Index (CPI) are indexes used to calculate the inflation in the country.
In order to calculate inflation India uses the WPI index.
WPI is defined as the average change in prices of commodities at the wholesale level. It is used to measure prices of Goods only and usually measured at the first stage of the transaction. It is only used in few countries including India. Which is usually paid by manufacturers and sellers.
CPI is defined as the average change in the prices of commodities, at the retail level. It is used to measure prices of Goods and Services both. Measurement of Inflation. It is usually measured at the final stage of the transaction. This is usually paid for by consumers. It is used by 157 countries.
If the inflation rate is 3-5%. It is beneficial to the economy. If it is outside this range, it is harmful to the country's manufacturing industry, further limiting employment and other opportunities.
It is considered that moderate inflation is usually good for economic growth.
Hyperinflation has reduced people's real income, reduced savings and investment, further reduced exports, and negatively impacted the balance of payments. Therefore, the economy as a whole is adversely affected by hyperinflation.
A class of society gets fixed income, these are pensioners, daily wage earners, salary receiving persons, etc. Inflation reduces the purchasing power of these people, which further reduces aggregate demand in the economy.
As per the RBI MPC meeting in Dec 2021, The repo rate remains unchanged at 4% while The reverse repo rate remains unchanged at 3.35%. The marginal standing facility (MSF) stands at 4.25%.
CPI-based inflation is retained at 5,3% for the financial year 2022 while the policy rate remains unchanged, The Inflation projection has been increased to 4.5% to 5.1% in Q3 and reduced from 5.8% to 5.7% in Q4 of 2021-2022
Firstly, the Bank of England (BoE) became the first major central bank to raise major interest rates on December 15 to combat inflation. The BoE's key interest rate rose 0.15 percentage points to 0.25% percentage points.
Secondly, Their monetary policy-centric inflation target was 2%, and the UK CPI inflation in November was 5.1%. Levels are not the only ones that have implemented monetary policy measures.
The rise in inflation was strong. Between September and November, inflation rose by 2 percentage points.
BoE expects the inflation rate to be on the rise early next year and peak at around 6% in April 2022.
At last, The COVID-induced disruption of supply chains is responsible for the increased up costs. On the demand side, inflation is rising due to the fiscal stimulus measures introduced in the United States.
Swastika Investmart Ltd. Group : Registered with
SEBI Reg. No. : NSE/BSE/MSEI/MCX/NCDEX: INZ000192732
Merchant Banking : INM000012102
Investment Adviser: INA000009843
CDSL/NSDL : IN-DP-115-2015
RBI Reg. No. : B-03-00174
IRDA Reg. No. : 713
NCDEX : 00844
Online Dispute Resolution : ODR
Issued in the interest of investors: Prevent Unauthorised transactions in your trading and Demat account. Update your mobile numbers/email IDs with Swastika Investmart Ltd.. Receive alerts and information of all debit and other important transactions in your trading and Demat account directly from Exchange/Depository on your mobile/email at the end of the day. KYC is a onetime exercise while dealing in securities markets. Once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary. For any grievances or queries related to Swastika Investmart Ltd., please drop an email at firstname.lastname@example.org. To see the investor charter : NSDL- https://nsdl.co.in/publications/investor_charter.php, CDSL- https://www.cdslindia.com/Investors/InvestorCharter.html. You can also register your complaint with NSE - www. nse-investorhelpline.com/NICE PLUS, BSE - email@example.com, MCX - firstname.lastname@example.org, NCDEX - email@example.com, SEBI - scores.gov.in/scores/Welcome.html. Benefits of SEBI SCORES - effective communication, speedy redressal of the grievances.“Attention Investors
.......... Issued in the interest of Investors"
Note: Standard warning- “Investment in securities market are subject to market risks, read all the related documents carefully before investing"
RISK DISCLOSURES ON DERIVATIVES.
Source: SEBI study dated January 25, 2023 on “Analysis of Profit and Loss of Individual Traders dealing in equity Futures and Options (F&O) Segment”, wherein Aggregate Level findings are based on annual Profit/Loss incurred by individual traders in equity F&O during FY 2021-22.
Trust Our Expert Picks
for Your Investments!