Recently, the country has been experiencing hardship in the standard of living. Prices of goods, are increasing at an alarming rate making life difficult for members in the society. Which as a result, has made the value of money fall each and every day. Day in day out, prices of goods are increased by a certain amount on the market. An example is the cost of pastry flour. Apparently, it used to be sold within the range of twenty to thirty cedis. But now being sold at an amount of fifty cedis.
At this rate, inflation could set in the country if prices of goods keep increasing. Inflation is the persistent and appreciable use or increase in the general price of goods and services. If this is to happen, the value of money will be rendered unable to perform it's function as a medium of exchange.
What Are The Causes Of Inflation?
Demand pull inflation. Which is the persistent increase in the general price level in an economy, as a result of demand exceeding supply. This implies when demand is far greater than what is being supplied, as in when people demand for more of a commodity than what is on supply in the market.
This could be due to low productivity, high population growth, embezzlement and corruption, and the excessive expenditure by government on long term project.
Solutions To The Cause Of Inflation
Population growth could be controlled to reduce the total number of people in a settlement, increasing productivity to supply more goods and services for demand. Also, direct taxes can be increased to minimize indirect taxes. This is so because, taxes are being placed on the purchase of goods. There should also be reduction in infrastructure expenditure.
If prices of goods were to keep on increasing at this rate, the level of standard of living in the country will fall.
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