Inflation means a general rise in prices. To be more specific, inflation is a persistent rise in the general price level rather than a once-for-all rise in it. Inflation is a sustained increase in the general price level leading to a fall in the purchasing capacity of money.
Inflationary forces can emerge from domestic and external sources and from both the supply and demand side of the economy. Inflation is a major problem in the world today. There are two important features of inflation in various countries of the world. (i) The rate of the inflation in recent years has been very high as compared to periods earlier. (ii) Inflation in recent years co-exist with a high rate of unemployment. The happening of inflation along with a high rate of unemployment is a new phenomenon. It has made it difficult to control rising prices.
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