What is inflation? And what does inflation have to do with us?

 

 

Many people who heard the word inflation would be confused. That in fact What is inflation? Why do we hear it so often? So how does it affect our country and ourselves? But in reality, inflation is something that concerns all of us, and it affects our daily spending and life. So let's try to get to know inflation better ...

Inflation, pronounced in English as "inflation," is an economic condition in which prices and services generally increase unusually rapidly. Or is it a condition where the currency decreases steadily or the condition where the product price level is increasing steadily ( Rising Prices) is simply the money that we have, it dwindles and so on. The value of money has decreased. The amount of money is in the hands of the people too much. Causing the same amount of money Unable to purchase the same amount of goods and services As time passes For example, the price of petrol in the past was 20 baht per liter and we used to fill 10 liters of gas it would cost 200 baht, but now the price of oil has become 40 baht per liter if we use the same money as before. 200 baht, we can only add 5 liters of gas, not 10 liters of the type that we used to fill. That means The occurrence of inflation Will make the same amount of money that we hold downOr lower the value itself, however , that the product has a high price ( High Prices) is not considered inflation Which the prices of products and services need to keep rising So it can be inflation

Inflation occurs when the prices of commodities rise, but inflation is not necessarily the case. All products must have the same higher price. It could be that some products have a higher price. But others have lower prices But the important thing is that the total mass is, on average, higher. And what we use to measure the change in price level is Price Index, which is this index produced by Ministry of Commerce It is calculated from the weighted average of prices of various products and services. That consumers can buy Including the Gross Domestic Product Price Index Which takes the prices of all products and services produced in the country to be calculated Which in Thailand, Bureau of Trade and Economic Indices The Ministry of Commerce is responsible for calculating and announcing official inflation figures.

The benefits of inflation In principle, inflation motivates everyone to spend and invest, as inflation causes the stored money to become less and less in value. Increasing spending and investing such as stocks, gold and etc. is beneficial to the economy and generates more money turnover.

Inflation can be caused by increased gross demand. Demand side pull It arises from the economic system that demand the quantity of goods and services more than that at the time, thus causing the price of the product to rise, the increase in demand for goods and services may come from many reasons such as the change in money supply.

Government fiscal policy implementation An increase in international demand And changing consumer behavior And another reason is Caused by higher production costs Due to the higher prices of raw materials used as production inputs. Or the rising wage rate Resulting in higher production costs As a result, the price of the product is high, as well as the increase in labor wages. The occurrence of natural crises Operator profit increase Changes in prices of imported products This may increase with the global market conditions or the effect of the exchange rate.

However, solving the problem of inflation It must be a monetary policy. About changing the money supply in the economy to be appropriate The main body that sets monetary policy is the Bank of Thailand. The main monetary policy is the setting of interest rates. The determination of legal cash reserves of commercial banks. Determining the buying and selling rate of thousands of government bills And solutions must include Fiscal policyIt refers to policies on the use of state income and expenditures as an important tool for setting guidelines, goals and actions for achieving economic goals, as well as monetary policy implementation. Now, I know that inflation is really on our side since we were born, and it is something we need to know in order to cope with inflation in the future to adapt to the world economy. The expansion and progress of the developed country ..... ^ _ ^ ... ..

Article and lectured by : Dolravee Phattharakulpimol
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