Deflation namely extra perilous than Inflation !

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nomics is a uncomplicated science which is too intricate, said Churchill. This expression is testified true today, with incompatible reports about inflation and deflation.
Inflation is measured using the WPI ( Whole Sale Price Index ). When inflation becomes negate, it becomes deflation. For example, say WPI at June 06,2007 was 200 and on June 06, 2008 was 220, then we say, inflation was ten percentage. If on June 06, 2009 the WPI was 231, then we say that Inflation is five percentage more than last year’s.
On June 18, 2009, the Govt announced that India is below deflation.
If deflation is prolonged, then it is quite dangerous, more hazardous than inflation. It will engender crisis and recession. More than amounts falling, it is the expectancy that prices ambition fall, that is more dangerous. If buyers believe that prices will fall furthur, investment determinations will be postponed. My friend was saying he will no buy a flat of 80 lakhs immediately, as he will get it because 40 lakhs afterward two annuals. Consumer justices that it is a Bear Phase and will not provide and will wait for prices apt fall. Let it be Stock Market alternatively Realty, the intelligent will merely enter at the end of the Bear Phase and not by the starting. !
Inflation is the phase where the prices of products and services go up in a bullish curve and Deflation is the phase where the prices of products and services go down in a bearish bend !
The prices of some commodities - particularly foodstuffs - are heaving during even the deflationary phase. The Wholesale Price Index is based on 430 commodities. Ordinary people are bothered only about the prices of foodstuffs, rice, sugar, wheat, fish, vegetables etc. The prices of bronze, coal, aviation fuel etc,[link widoczny dla zalogowanych], ( which is also included in the 430 commodities ) are something the general man is not perturbed almost. The common man does not benefit while the price of aviation fuel comes down. But the prices of foodstuffs do not come down and this explains why prices of some commodities are ascending during deflation.
Now this inexplicability is resolved when anything is based on the CPI, the Consumer Price Index.
The Wholesale Price Index above June 06, 2008 was 236.5 and on June 06, 2009 was 232.7 and hence Deflation is 1.61%.
Now Consumer Price Index can be followed as it highlights the prices of essential commodities and if we follow the CPI, we have an inflation at 8% !
Inflation was 11% when oil was verdict at 140 dollars per barrel. The inflation of today is merely a statistical aberration.
People will delay their buying during Deflation. During inflation, when people thought price of rice was jump to work up, they bought ponderous quantities of rice. Now the reverse phenomenon will happen during deflation. The buying of rice, wheat, medicines etc which are required will be deferred. There will be fewer demand. The manufacturers will have to slash down output. There will be retrenchment of employees as commerce becomes lax, unemployment will rise and the whole economic will be affected considerably.
From 1990-1996, Japan was under deflation. The World Financial Crisis is here to stay. Global economic deflation is at 2%. Global proceeds will come down 2%. In Japan, Singapore,[link widoczny dla zalogowanych], Dubai and Russia income will come down by 8%. Of the G 20 countries, only India and China has recorded agreeable growth. In 2009, China will grow by 7% and India by 6%.
Now India has grown along 5.8% during this universal recessionary phase and this shows the resilience of the country. The backup sector has convert weak. But then the industries led along consumer demand like iron, concrete, automobiles, two wheelers do not face recession at all. We tin expect a 6% growth this fiscal, if not harmful factors hit us. There should not be any deflation in one economy with more than 4% growth, along to Economics. Even if deflation buffet us, it will only be a temporary phenomenon.
Whether Inflation or Deflation is more dangerous is an amusing de