Inflation and Its Impacts in Malaysia

Inflation is when there in an increase in price of goods and service, causing there to be a fall in the currency as lesser goods and services can be brought by each unit of currency due to the rise in price. Rapid economic growth will often lead to inflation. When the economy is rapidly growing, a company will need to employ more employees, resulting to a fall in unemployment rate. As unemployment rate falls, lesser people will be looking for jobs and the company will find it harder to fill up job vacancies. This will cause the salaries of the workers as well as company spending to increase, resulting in the company passing on the extra costs to the consumer. Together with the raise in salaries for the employees, they will have more to spend, resulting in an increase in an aggregate demand. All this will result in rapid economic growth, where the increase in price will cause inflation to occur.

The term `inflation' defines a situation in which prices are rising and the value of money is falling. The cause of inflation is due to too much money in the economy ben printed and the high rise in demand. too few goods. An inflationary spiral tends to set in. Increasing prices produce a demand for higher wages: higher wages mean that goods cost more to produce: prices must go up again to pay for the wage increases.

In economics, inflation is a managed increment in the general price level of products and ventures in an economy over some stretch of time. At the point when the price level ascents, every unit of cash purchases less merchandise and enterprises; therefore, inflation mirrors a lessening in the acquiring influence per unit of money – lost genuine incentive in the medium of trade and unit of record inside the economy. A central measure of price inflation is the inflation rate, the annualized percentage change in a general price index, for the most part the shopper price index, after some time. The inverse of inflation is deflation.

The problem of inflation increases the price of goods, which is obviously an increase in the

What are the causes of inflation? Inflation has a variety of possible causes, but they are between the Keynesian and monetarist theories, ranging between demand-pull, cost-push, built-in inflation, and the quantity model. With demand-pull, inflation is caused by aggregate demand being more than supply. With cost-push, inflation is caused when manufacturers and businesses raise prices due to shortages in order to balance increases in production costs. With built-in inflation, inflation occurs due to prior increases in prices

Now in regards to the rise of minimum wage this type of inflation is defined as cost-push inflation.  For cost-push inflation to take place, demand for the affected product must remain the same, while the cost of production changes. To compensate for the increased cost of production, the producer must raise the prices of the goods and services to the consumer to maintain profit levels while keeping pace with expected demand.  For example, if a manufacturer is suddenly forced to pay his workers $10.50 per hour instead of $9.25 per hour, he will suffer great financial losses as a result of the increase.  Therefore, the manufacturer is left with one of two options, which are either laying off a couple of workers or having to raise the price of his products to recoup for the

Demand-pull inflation happens when there is an extreme amount of demand for products and services. This is a result of an increase in the money supply by the central bank system. Consumers then have the ability to demand more of the products they want. Cost-push

Inflation is the sustained increase in the general level of prices for goods and services in a county, and is measured as an annual percentage change. (Investopedia) During periods of inflation, the prices of products and services will rise. There are several reasons why an economy would see a rise in inflation. Decrease in supplies, corporate deciding to charge more, and consumer confidence are some of the reasons why an economy would see the inflation rate increase. Consumer confidence is when consumers gain more confidence in spending due to a low unemployment rate and wages being stable. Decrease in supplies is when consumers are willing to pay more for a product or service is that is slowly becoming unavailable due to a decrease in supplies. Corporate decisions are when the corporations basically decide

commodities increases such as milk, gas and bread. It is a rise in all prices simultaneously. Inflation is caused when the demand for something exceeds the supply. This causes the price of that particular item to go up which in turn causes wages to go up and operating costs also increase (inflation).

The dispute of the price revolution it is the opposing views of the reasons triggering inflation, moreover the main dispute in the global economic science. The Seville price revolution created inflation in the other regions bordering the market centers, the inflation was spread quickly into thwe Osman Empire and creating financial crisis and uprising of the 1589. It spread to Poland,. Due to bread pricing increase and polish magnates was favorable to import due to the price increase, the agrarian economy reached capsulazation and missed industrial

Many people blamed oil prices, union leaders, and greedy businessmen for the great inflation. The real reason that the Great Inflation was started was because of an inflation rate or interest rate to ensure price stability and general trust in the currency, or the bank allowing too much money borrowed. Many political leaders were supportive which added on to this problem. The Great Inflation wrecked many businesses, and hurt individuals.

Inflation occurs when an economic system experiences widespread price increases. Too much inflation is a bad thing because it means the dollar doesn’t have the same purchasing power it did. Costs of goods rise with inflation, but too much inflation too quickly prevents people from keeping up with the changes in cost. For those who don’t receive income increases quickly enough, inflation reduces the value of the goods those people can buy. For the currently employed, this means they need a salary raise just to keep up with inflation rates for meeting even fixed payments like rent or mortgages.

The prices rise when the government prints too much money because individuals have more money to spend and companies want as much money they can get from the customers as

Inflation is an increase of the currency of a country by issuing more printed money.

Another factor that contributed to the growth of inflation was the drought in many parts of Brazil . That condition increased the costs of production of in natura products which also led to an increase in food price in general. Because of the drought, producers are reducing the area of plantation in 30% to 50% and that reduces also the availability of those products in the market, driving up the prices even more.