Our objective is to keep inflation below 6%. Growth in 15-16 expected to be 8 – 8.5 % : Arun Jaitley [ Finance Minister ]

28 February 2015 :: Our objective is to keep inflation below 6%. Growth in 15-16 expected to be 8 – 8.5 % :: Arun Jaitley [  Finance Minister ]. He was speaking while presenting Union Budget 2015 – 16.

Inflation

In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the consumer price index) over time. The opposite of inflation is deflation.

Inflation affects an economy in various ways, both positive and negative. Negative effects of inflation include an increase in the opportunity cost of holding money, uncertainty over future inflation which may discourage investment and savings, and if inflation were rapid enough, shortages of goods as consumers begin hoarding out of concern that prices will increase in the future. Positive effects include ensuring that central banks can adjust real interest rates (to mitigate recessions), and encouraging investment in non-monetary capital projects.