Phase IFoundation
Background
Overview
UPSC frequently asks about inflation, its causes, types, measures, and socio-economic consequences. Understanding its impact on different segments of society (households, businesses, vulnerable populations) is crucial for policy analysis and governance.
Inflation refers to the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. It is a key macroeconomic indicator that affects households, businesses, and the overall economy. Persistent high inflation erodes real incomes, increases the cost of living, and can lead to social and economic instability.