Therefore, inflation is a stat of economy in which the value of money is falling i.e. prices are rising. Normally, rate of inflation i.e. increase in average prices level, is measured with the help of price index or GDP deflator.
Cost of living is increased, when inflation increases .These are simply directly proportional to each other. This situation badly affects the labor class i.e. lower class of the country. They have scared financial resources and lots of financial problems to deal with.
Increase in street crimes is also one the problems created by inflation directly. When people have burden of problems and frustration due to less financial resources but increasing prices, they jump into the street crimes to fulfill their needs.
Inequality in Income Distribution is also part of economic diseases born by inflation. Here, rich become richer and poor become poorer. An abnormal unbalance is created in the society. This may lead to further social and economical problems in the country.
Decrease in savings, also incurs when inflation is in increasing trend. People will spend all what they will earn and saving no penny for the tough time. Rate of interest will also increase due to increase in inflations.
B- Monetary Policy: This constitutes the steps taken by Central Bank to control the supply of money with the aim of achieving economic stability.