New Delhi56 minutes ago
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Retail inflation may come down to 5.6% in November. Earlier in October, retail inflation had reached 6.21% due to increase in cost of food items. This was the highest level of inflation in 14 months. Retail inflation data for November will be released today at 05.30 pm.
Food items contribute about 50% to the inflation basket. In October, its inflation increased from 9.24% to 10.87% on month-on-month basis. Whereas rural inflation increased from 5.87% to 6.68% and urban inflation increased from 5.05% to 5.62%.
How does inflation affect? Inflation is directly related to purchasing power. For example, if the inflation rate is 6%, then Rs 100 earned will be worth only Rs 94. Therefore, investment should be made only keeping inflation in mind. Otherwise the value of your money will reduce.
How does inflation increase and decrease? The rise and fall of inflation depends on the demand and supply of the product. If people have more money they will buy more things. Buying more things will increase the demand for things and if the supply is not as per the demand, the price of these things will increase.
In this way the market becomes vulnerable to inflation. Simply put, excessive flow of money in the market or shortage of goods causes inflation. Whereas if demand is less and supply is more then inflation will be less.
Inflation is determined by CPI As a customer, you and I buy goods from the retail market. The work of showing the changes in prices related to this is done by the Consumer Price Index i.e. CPI. CPI measures the average price we pay for goods and services.
Apart from crude oil, commodity prices, manufactured costs, there are many other things which play an important role in determining the retail inflation rate. There are about 300 items on the basis of whose prices the retail inflation rate is decided.
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