The 5 causes of inflation are increase in wages, increase in the price of raw materials, increase in taxes, decline in productivity, increase in money supply. You can read about Inflation in Economy- Types of Inflation, Inflation Remedies, Effect of Inflation in the given link.
Increase in money supply will naturally increase the prices, because when there is more money to purchase the same amount of services and goods. Even when there is decline in productivity is one of the causes for inflation.
Further readings:
- Indian Economy Notes for UPSC Civil Service Exam
- Monetary Policy – Objectives, Monetary Policy Committee, Instruments of Monetary Policy
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Related Links |
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Wholesale Price Index (WPI) – An Overview, Differences with CPI – Indian Economy Notes |
Consumer Price Index (CPI) – Types of CPI, Calculation of CPI – Indian Economy Notes |
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