Common man and Inflation

With the food inflation touching the high of 14.4% for last week of 2010. Do the common man has to really worry about inflation? Do the Govt can really control the inflation? Is it justified to say Inflation is high at 10%? This were a few questions revolving in my mind.

1.Do the common man has to really worry about inflation? I felt why should a common man worry about rising Inflation rather he should think how he can really earn better and beat the inflationary effect on his Income.It has been the trend for the prices to rise at regular intervals otherwise salaries would have never gone up from Rs 500 to Rs 50000 from 30 yrs back from now.

So the common man should demand for higher wages for his services, business man should demand higher prices for his produce and beat the inflation this way our economy is structured with the demand and supply gaps.

2. Do the govt can really control the prices? No not really since the measures on the monetary tightening will only have adverse effects on the economy in the long run and only increase in production can help to certain extent. The economy or the inflation is co-related to the demand and supply gaps. And it is driven by the public depending on the supplies of the given product.

The inflation is again driven by all of us by demanding higher for our produce or for our services or urge to spend more as per increasing income levels, which creates a demand supply mismatch.

3.Is it really justified to say that Inflation is high at 10%? not really since the inflation is co-related to the demand and produce it cannot be kept under control.Since we are ready to pay any price to acquire the same product its cost is increased. Simply it proves we have more money to buy the same product at a higher cost.

For example if a house is sold at the 10 times of the quoted price then it shows that there is a demand for that house where inflation can be 500% due to lesser supply. In the long run it is good for the economy since the earnings of our employees will match up with International peers which will help us to attract better talent for us rather than losing it to the developed nations.

So all of us should demand for higher pay packet for our services then only we can beat the inflation since No govt has been able to get the inflation to a nil. And if they would have also got it to the nil then salary of a avg employee would have remained at Rs 500 rather than 50k.

So there will be gradual increase in the income as per the inflation and if you are able to get a double increase in your pay packet compared to inflation then you are succesful and would not be fearful of any inflationary effect.

So cheer up earn more and spend more is the funda and compete with the internatinal peers...

Oil at 100$ a minor abberation

Oil is expected to touch a high of 100$ and even some predictions that it will cross above 100$ to reach 120$ and leading to the all time of high of 150$.

But the concern is can the world afford the oil prices above 100$ to continue to grow. The answer is NO. If it cannot then the oil prices has to come down and it will happen. Oil may stage a march towards 100$ but will shy away from the three digit figure and expected to trade in the range of 75$ to 90$.

The current oil prices is supported by the growth in the economies of various countries but will not cross 100$ since the prices are not driven by only demand it is also the effect of the bubble created.

Another factor which will keep the oil prices under check is the strong focus of many countries towards advancing in the renewable energy specially the Solar and wind energy which are available in abundant.So don't be panicked it is the trend of any commodity to rise and fall as per the demand and also the speculation by marketeers.Do write in your views on the above topic.