Common Myths About Inflation

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There are always some myths and misconceptions about inflation. The most common misconception about inflation is higher inflation indicates a growing economy.

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It is true that when the income of people increases the expense also rises and it promotes inflation. But the most important point is whether the higher income is distributed fairly or not. If the income increases for only a small group of people, then the other larger portion of people have to lead a measurable life due to higher inflation.

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Furthermore, it is thought that Inflation is a cause of international factors. It is another myth of inflation that is very popular among political people. The international oil price and socio-political situations influence the local price in this open market economy. But it is not the fact all the time.

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Sometimes local suppliers increase the price of the commodities. The local government also can be responsible for higher inflation by imposing excessive taxes and fees. The unproductive transaction of money without rising production can also increase the inflation rate. So, the international factors may not be the only factor behind the higher inflation of any country.