Inflation Measured

What are the main causes of Inflation?

Inflation is regarded favourable for the economy at a reasonable rate, which varies from country to country and from time to time. Several measures to manage inflation are implemented when inflation exceeds the desired rate. To keep the issue under control, countries frequently adopt monetary measures.

Due to India’s reliance on energy imports, the unpredictable impact of monsoon rains on its massive farm sector, difficulties delivering food goods to market due to inadequate roads and infrastructure, and the country’s high fiscal imbalance, consumer prices can be extremely volatile. The consumer price index (CPI) took over as the primary measure of inflation in 2013 when the wholesale price index (WPI) was phased out.

Who measures Inflation in India?

Inflation is tracked by a central government agency that is in-charge of implementing policies to keep the economy running smoothly. The Ministry of Statistics and Program Implementation in India keeps track of inflation.

How is Inflation measured?

In India, two key indices, the WPI (Wholesale Price Index) and the CPI (Consumer Price Index), are used to assess wholesale and retail price fluctuations, respectively. The CPI measures the price differential between goods and services purchased by Indian consumers, such as food, medical care, education, and gadgets.

The WPI, on the other hand, captures the items or services sold by firms to smaller businesses for resale. WPI (Wholesale Price Index) and CPI (Consumer Price Index) are both used to calculate inflation in India.

Monetary Measures to Control Inflation

The monetary measures which are widely used to control inflation are:

1. Bank Rate Policy: 

The bank rate policy is a key tool for keeping inflation under control. The bank rate, also known as the Central Bank rediscount rate, is the price at which the central bank purchases or rediscounts qualifying bills of exchange and other commercial documents provided by commercial banks in order to accumulate resources.

2. Variable Reserve Ratio: 

Commonly known as the Cash Reserve Ratio (CRR), the variable reserve ratio (VRR), is a percentage of total demand and time deposits that commercial banks must keep in cash reserves with the central bank.

3. Open Market Operations: 

Open market operations are characterised by the sale and purchase of government securities and bonds by the central bank. The central bank buys and sells government securities and bonds to the public through commercial banks.

The fundamental causes of India’s inflation have provoked passionate debates and discussions. Some of the key reasons for the price increase are as follows:

• High demand and insufficient production or supply of a lot of commodities produce a demand-supply gap, resulting in a cost increase.

• When the inflow of cash is happening too widely, resulting in inflation.

• When people have more money, they are more likely to spend it, resulting in increasing demand.

• Inflation lowers the real worth of money, making the market’s liquidity constraint tighter. This issue can be remedied by using a financial intermediary to move cash from entrepreneurs with excess liquidity to those that don’t have enough.

Take heed of the following hints:

• As the price of the final product rises, a spike in the price of some commodities generates inflation. This is referred to as “cost-push inflation.”

• Price increases for goods and services are also an issue to consider, as the involved labour expects and demands higher costs/wages to maintain their standard of life. This leads to a further rise in the cost of goods.

Measures to Control Mineral Water Market in India

Because drinking water is becoming one of India’s most pressing challenges, the bottled water industry has exploded in recent decades. Bottled water was first introduced in Western countries in the early 1900s, and in India in the mid-1970s.

Traditionally, bottled water was thought to be a luxury item preferred by the wealthy; however, due to rising health concerns and a lack of safe drinking water, demand for bottled water has increased.

Nowadays, people spend a big portion of their time outside their homes and prefer not to drink outside water due to safety concerns. As a consequence, most individuals choose to carry a water bottle or buy bottled water, which is both convenient and economical. Customers prefer to buy 20L bulk containers of water for home use, functions, small hotels, and restaurants rather than installing water filters.

Indian Scenario of Bottled Water Market

The need for bottled water in India is primarily owing to a lack of clean drinking water due to an immense expansion in the population, the inflow of cash from foreign students and visitors, poor quality of tap water, and the simplicity with which bottled water can be obtained, as well as a rise in health awareness. Because the government has failed to supply safe drinking water in all areas, private players have stepped in to fill the void while also establishing a thriving company. The top mineral water companies in India are focusing on growing their market share through effective marketing strategies and beautiful packaging. The market was worth Rs. 160 billion in 2018, and it is expected to grow at a CAGR of 20.75 percent each year until it reaches Rs. 403.06 billion in 2023. This is another example of a monetary measure to beat inflation.

Flavoured bottled water has also been gaining popularity in India. Flavoured water including fruit essence and artificial sweeteners, as well as soda, cola, juice, and other sweetened beverages, are frequently used to replace plain bottled water. Flavoured bottled water is occasionally preferred above regular bottled water by consumers. This transition is creating an opportunity for bottled water firms in India to increase their product portfolio.

Conclusion

With bottled water’s rising popularity, it’s more vital than ever to assess not only its mineral content but also, more importantly, its potential pollutants, particularly organic ones. Bottled waters are a particular example in this regard because, in addition to organic chemical contaminants generated from the well from which they were obtained, secondary contamination is always a possibility during treatment, storage, or transportation under improper conditions (sunlight and elevated temperature).