Economic Inflation: A Reality Check

India Has Managed Inflation Better Than Most Countries, While Inflation Led Consumer Prices During This Period Hit A Near Eight-year High And Remained Above The Central Bank's Tolerance Ceiling For Nine Straight Months. Higher Inflation Has Been A Concern For Central Banks Across The Globe, Including India, As The Uncertain Nature Of The Russia-Ukraine-War

- Kamal Kumaraswami

In most of the countries, every year apropos to the increase in the wages of workers, operational cost, production cost and Government taxation, a small price hike will be there in the major goods and services being offered to the public by the governments and private bodies. This is a normal phenomenon and not inflation. On the other hand, global inflation is merely a swift price rise episode in the goods and services consumed by the public due to an increase in demand and drop in supply for a certain period of time.

However, what the world is going over right now is a "Global Hyperinflation." This is a combination of Cost Push and demand pull inflation which is an abnormal inflation. It is nothing but a peculiar whirlwind price rise in most of the goods and services consumed by the people globally for a certain period of time. This type of hyperinflation will bite every country's primary currency that will eventually end up landing in a global recession. The current global inflation rate is approximately 8.8 per cent at the moment which is the third highest inflation rate in the last 30 years. The first and second global inflation rate was approximately 10.3 per cent and 8.9 per cent in the years 1994 and 2008 respectively.

ROOT CAUSE OF GLOBAL INFLATION

The current global inflation started in early 2020 and has reached its peak right now. While many have given different reasons for the cause of this weird global economic inflation and recession, the months-long curfew in most countries during the COVID-19 pandemic at the beginning of 2020 led to the halt of production of goods and services and disruption in supply chain between the countries. This was followed by the change of regime and economic policies in the US, and then the Russia-Ukraine war.