Inflation Report: Causes, Management, and Global Analysis

This report provides a comprehensive overview of inflation, examining its definition, causes, and the methods employed by central banks to manage it. It delves into the inflation rates in the Euro area, the UK, and the US, specifically focusing on February 2021, and analyzes the impact of monetary ...Read More

Inflation

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Causes..........................................................................................................................................3
How Central banks manage inflation..........................................................................................3
Inflation Rate in Euro area, Uk and Us in February 2021...........................................................4
Monetary Policy and Fiscal Stimulus Packages..........................................................................5
CONCLUSION................................................................................................................................6
REFRENCES...................................................................................................................................7
Books and Journal........................................................................................................................7

INTRODUCTION
Inflation is the concept which refers to the increasing in the price of several goods and
services of common used like housing recreation transport clothing food and several more.
Inflation rate is evaluated by the average price change in a services and commodities over time.
This report is going to explain about the factors which contributed to the low rates of inflation in
the euro area. Also, the path of the inflation in 2021 which support monetary policy and fiscal
stimulus packages.
MAIN BODY
Inflation rate overcome the purchasing power of every unit of the currency that it leads
towards the racing in the price of the product and services which are provided by the company. It
is the economic term which termed as the person have to spend more in order to to buy a gallon
of milk or to get a haircut or to fill each in anything. Since early 2013, inflation in the euro zone
has been slowly declining, eventually turning negative at the end of 2014. Energy prices have
played a part in the downturn, but the weakening of overall demand has also played a role. The
inflation rate in U.S has overcome the values of the dollar. The inflation rate is the percentage
which is measured through the increasing or decreasing in the price in particular period of time
or usually a month or year. The inflation rate percentage describe that how quickly the prices are
increasing and decreasing in particular time period (Tasinato, 2021). If the inflation rate is
become high as compared to the 50% in a month then it is called hyperinflation and if the
inflation occurs at the particular same time then it is called as stagflation. Increasing pricing of
housing gold or stock are known as asset inflation.
Causes
There are generally two causes of inflation which is demand that pull the inflation when
the demand out spaces supply for the goods and services. The second cause of inflation is cost
push inflation in which when the supply is restricted but the demand of the product is high. There
are some more sources which days in the money supply this is also cause of inflation.
How Central banks manage inflation
Monetary policy is used by central banks all around the world to avoid inflation and deflation. In
the United States, the Federal Reserve targets for a year-over-year inflation rate of 2%(Airaudo,
Buffie and Zanna, 2016)(Gagnon and Collins, 2019).The FOMC declared on August 27, 2020
that it would approve a target inflation rate of more than 2% if it would help ensure full jobs. It
continues to aim for 2% inflation over time, but is able to accept higher prices if inflation has
been poor for a long time.

Inflation Rate in Euro area, Uk and Us in February 2021
Inflation rate in the euro area has been decreasing since 2003 and in 2014 it turned
towards the negative impact. The variation in the rate of inflammation in euro area countries has
a significant sect oral component. The inflation rate takes into account a currency's monetary
policy. Inflation in the euro zone fell in February, which is usually accredited to the rise in oil
prices. Over the past two years, the country's oil prices have been tumbling rapidly, weighed
down by oversupply from around the world. In February 20 21 the inflation rate is down to 0.4 %
in February and binding down from January 0.7%. The yearly standard inflation rate of United
Kingdom is it losing to 0.7 % in February. The inflation rate of United Kingdom in February
2021 is 0.4 % as compared to the same month of the last year. The rate of inflation in the United
Kingdom in February 2020 2 February 21 is 0.4 %. Inflation rate is defined as the depreciation of
the wealth which induced by a constantly increasing in the cost and price level of the commodity
that is investment products or consumer product (Conti, Neri and Nobili, 2017). The PPI which
is known as consumer price index despite the revolution of the rates and prices for private
spending expenditure and also the rate of inflation when they increases. According to the
investigation inflation rate of us in February 2021 is 1.7 %.Inflation rate in United state in
February was 1.7 and which is a from 1.4% in January. Meanwhile this pattern continues with
the annual average of inflation in the month of February which remaining unchanged from the
January which is 1.1 %. The core inflation fell to directly 1.3% in the month of February from
the 1.4 % in the month of January(Forbes, 2019).
Inflation in UK
Inflation in US

Monetary Policy and Fiscal Stimulus Packages
The monetary policy in UK the bank of England monetary policy position the policies in
order to accomplish the 2% inflation target. They also said the monetary policy which support
them to continued growth and service in the country. The government authority and the
committee analyze that the existing strengths of monetary policy relics much amended and
appropriate. There are three kinds of tools which are conducted by the monetary policy that is
Reserve requirements and the discount rate. In order to in order to keep the inflation rate is low
and constant the United Kingdom inflation target is 2%. This target support each and every one
to map their future but if the inflation rate is become too low then there are few people may foot
of spending because they anticipate the cost to increase or fall. In the United Kingdom the
monetary policy which is positioned by the MPC of the bank of England. They are provided
inflation target through the government in order to forecast the price and value of the products
and services. If the inflation rate is forecast to raise the target so the MPC are capable to raise
their interest rate. Rising interest rate will going to support them to overcome the growth and
development of collective demand in the economy. These policies help the government and
individual to overcome the inflation rate that create positive impact on the country towards the
employment and growth (Loberto and Perricone, 2017). Central bank operations aimed at
influencing the amount of liquidity and credit in an economy are referred to as monetary policy.
Fiscal policy, on the other hand, applies to the government's policies on taxes and expenditure.
To monitor economic growth over time, both monetary and fiscal policies are used. Monetary
policy is easy as compared to the fiscal policy because fiscal policy is extremely divided
National Political environment as compared to the monetary policy. The monetary policy is
generally realize and execute to the independent authority's of monetary

CONCLUSION
From the above mentioned the court it has been analyzed that the inflation rate is the term
which refers to the increasing and decreasing the price of the goods and services. There are few
causes through which the inflation rate is become high and low. By increasing in the inflation
rate it create impact on the several things like decrease the value of the dollar and increase the
interest rate of the loans and also decrease the real returns on the savings of the individuals.
Inflation rate is also create impact on the economics of the country full stop in order to overcome
the inflation negative impact of the government at the ready develop some policies like fiscal and
monetary policies that help the individuals and country to overcome the negative impact of the
inflation rate in order to overcome the unemployment from the country and increase the growth
and opportunities for the particular Nation.

REFRENCES
Books and Journal
Tasinato, G., 2021. Analytic approach to non-slow-roll inflation. Physical Review D, 103(2),
p.023535.
Conti, A.M., Neri, S. and Nobili, A., 2017. Low inflation and monetary policy in the euro area.
Loberto, M. and Perricone, C., 2017. Does trend inflation make a difference?. Economic
Modelling, 61, pp.351-375.
Forbes, K., 2019. Inflation Dynamics: Dead, Dormant, or Determined Abroad? (No. w26496).
National Bureau of Economic Research.
Airaudo, M.M., Buffie, M.E.F. and Zanna, L.F., 2016. Inflation targeting and exchange rate
management in less developed countries. International Monetary Fund.
Gagnon, J. and Collins, C.G., 2019. Low Inflation Bends the Phillips Curve. Peterson Institute
for International Economics Working Paper, (19-6).