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India’s Retail Inflation
Context
India's retail inflation in November was at 5.48 per cent as compared to 6.21 per cent logged in October, falling in line with the Reserve Bank of India's 2 to 6 per cent comfort band.
What is Inflation?
- Inflation is the rate at which the prices of goods and services increase over time.
- As prices rise, the purchasing power of money This means with the same amount of money, you can buy fewer goods and services than before.
- Inflation affects the cost of living: when prices rise, people can buy less with the same amount of money, which is particularly tough for households with low or fixed incomes.
- Why does this matter? When inflation rises, the real interest rate goes down, making savings less attractive because the value of your money doesn't grow as much.
Measuring Inflation:There are several ways to measure inflation, focusing on different aspects of the economy:
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