Effect of Inflation in Indian economy

  • The purchasing power of a currency unit decreases as the commodities and services get dearer.
  • This also impacts the cost of living in a country. When inflation is high, the cost of living gets higher as well, which ultimately leads to a deceleration in economic growth.
  • A certain level of inflation is required in the economy to ensure that expenditure is promoted and hoarding money through savings is demotivated.