inflation presentation mnp
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BY SIDRA AIMAN
BSS-V
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CONTENTS Definition
Methods to measure inflation
Causes of inflation
Effects of inflation Role of inflation in an economy
Factual data
C
urrent scenario of inflation in Pakistan Government role in controlling inflation
Recommendations
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DEFINITIO
N
Rise in the general level of prices of goods
and services in an economy over a periodof time.
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METHODS TO MEASURE
INFLATION CONSUMER PRICE INDEX (CPI)
WHOLE SALE PRICE INDEX (WPI)
SENSITIVE PRICE INDEX (SPI)
Inflation
Rate =
Inflation
Rate = 100100
100
= 7.127.12%
CurrentCPI/WPI LastCalculatedCPI/WPI
LastCalculatedCPI/WPI
150 140
140
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CAUSES OF INFLATION Printing excess money.
Demand-pull inflation.
Cost-push inflation.
Wage-push inflation. International lending & national debts.
Decline of exchange rate.
Federal taxes put on consumer products.
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FEW OTHER FACTORS
Rapid growth in population.
Growth in private expenditure.
Increase in export.
Money reduction in direct taxes.
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EFFECTS OF INFLATION Storage value and purchasing power of
the rupee decreases.
Consumption declines.
Production minimizes.
Poverty increases.
Less investment.
Low profits.
Withdrawal of money from banks.
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ROLE OF INFLATION IN
AN ECONOMY Low inflation is a blessing.
More than 5% is pernicious.
Zero inflation indicates depression.
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PAKISTAN GDP GROWTH
RATE
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Period SPI CPI WPI
1991-1992 10.54 10.58 9.84
1992-1993 10.71 9.83 7.36
1993-1994 11.79 11.27 11.40
1994-1995 15.01 13.02 16.00
1995-1996 10.71 10.79 11.10
1996-1997 12.45 11.80 13.01
1997-1998 7.35 7.81 6.58
1998-1999 6.44 5.74 6.35
1999-2000 1.83 3.58 1.77
2000-2001 4.84 4.41 6.21
2001-2002 3.37 3.54 2.08
2002-2003 3.58 3.10 5.57
2003-2004 6.83 4.57 7.91
2004-2005 11.55 9.28 6.75
2005-2006 7.02 7.92 10.10
2006-2007 10.82 7.77 6.94
Yearly Inflation Rates ofPakistan ( 1990-91 = 100)Inflation Rates basedon SensitivePriceIndicator(SPI),ConsumerPriceIndex (CPI) and
WholesalePriceIndex (WPI) are
Note: Yearly Inflation rates for the year 1991-02 to 2000-01 are based on 1990-91=100 while
inflation rates for the year 2001-02 till to date are based on 2000-01=100
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CURRENT SCENARIOOF
INFLATION IN PAKISTAN
Pakistan is facing hyper inflation
presently.
Annual inflation rate in October 2010
stood at 15.3 % .
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GOVERNMENTs ROLE The State Bank of Pakistan (SBP) has
continuously tightened the monetary
policy over the last triennium and more so
in the current fiscal year. The government has relaxed its import
regime and allowed imports of essential
commodities.
The government also increased the scale ofoperations of the Utility Stores
Corporation (USC).
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RECOMMENDATIONS Reduce our Government Luxury Expenses both
Federal and Provincial.
Reassess the complete system of Direct and
Indirect Taxes.
Increase the Production of Food, Industry andService things.
Should charge Capital Gain tax.
Reduce Unemployment.
Increase in Agriculture, industry. SBP should take major steps to control inflation.
Pakistan should become self reliant.
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QUESTIONS?
COMMENTS?
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