Money
Why Do Prices Keep Going Up?
Inflation means the price of everyday things — food, clothes, bus tickets — rises over time. Here is how it works and what it means for your pocket money.
4 %the upper target for inflation set by the Reserve Bank of India
The facts
- 1Inflation is measured as a percentage — for example, 5 % inflation means something that cost ₹100 last year now costs ₹105.
- 2Central banks (like the Reserve Bank of India) try to keep inflation around 2–4 % per year.
- 3When too much money chases too few goods, prices go up — this is called demand-pull inflation.
- 4When it costs more to make things (like fuel or raw materials), shops pass the extra cost to buyers — this is cost-push inflation.
- 5Moderate inflation is normal; very high inflation (called hyperinflation) can make money almost worthless.
Why it matters
Understanding inflation helps you see why the same amount of money buys less over time — and why saving and investing matter.
Sources
- Reserve Bank of India — What is inflation? (explainer page)
- The Economist — Inflation basics
- NCERT Economics textbook, Class 10
Related explainer
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