Inflation Rate in India is touching the Sky

[Image Source: Hindu.com]

Inflation Rate in India is touching the Sky

Inflation rate in India is rising day by day. Through out the year 2010, the Inflation rate in India has fluctuated between 8-14%. Now, this is really a very high inflation rate.

Food prices are rising which is making the basic food items simply un affordable to the lower class people.

The main reason behind rising this inflation rate is government monetary policy. And there is also an effect of US Government monetary policy on it.

As the western world is printing billions and trillions of dollars out of thin air, this newly printed money is flowing into the emerging economies like India and China and shooting up the prices of all the assets.

And because of this the inflation rate is also hiking like anything.

As I have already told you in several of my previous articles that since 1971, the world has removed the gold standard. Means the modern money is Currency (Also known as ‘Fiat Money’) which is now backed by any gold.

Thus, this means that the governments and central banks from all around the world can print as much amount of money as they want. And every time they print new money, it dilutes the purchasing power of the existing money in the economy.

If the inflation rate remains in 2 digits (Above 10%) than PPF, Bank FDs, Post-office Savings schemes and other Fixed income instruments become worthless.

This is because inflation erodes the purchasing power of the existing money in the economy.

Indians need to be financially smarted and well-educated now. Only financial education can teach you that how to beat the inflation by investing your money wisely. So what are you waiting for? Start learning basics of investing now and beat the inflation like rich people.