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Showing posts with label HYPER INFLATION. Show all posts
Showing posts with label HYPER INFLATION. Show all posts

Thursday, March 26, 2009

If we are seeing disinflation rather than deflation, what does that mean?

Disinflation is a drop in the rate at which prices rise, and does not actually mean a price fall -- at least, on a sustained basis across-the-board. For example, the WPI rate was 0.44 per cent in the week to March 7, which means prices actually rose by a tiny percentage. We call that disinflation because the WPI has been falling almost continuously since August, 2008, when the rate nearly touched 13 per cent.
In the coming weeks, if the WPI goes into negative territory, and prices actually start falling, it would still be called disinflation -- as long as the fall does not continue indefinitely. On the other hand, the US, Western Europe and Japan are closer to deflation, as their inflation rates are down and economies are actually contracting .It is to counter the threat of deflation that their governments are shovelling trillions of dollars into the credit markets, into failing banks and industries like autos.
So what will tell us if we are really into a deflationary scenario? Experts says the first signal would be a contraction in GDP. "A contraction in output (GDP) is when there will be a worry on deflation. This is happening in the US, where prices are declining and output is contracting. GDP is not contracting in India; there is only a slower rate of growth."
This, however, does not mean we have no cause for worry, or that deflation will never happen. Experts belive "More than cutting rates, ensuring the flow of credit is important. If credit does not flow then any amount of interest rate cuts will not help. We have room for cuts, but cuts should be only a part of the plan. The main objective should be credit flow, which is not happening now."

It's disinflation, not deflation, we're facing now

Today inflation number came at -- a drop to 0.27 per cent in the wholesale prices index (WPI) -- brought more worries than cheers. That's because deflation -- a situation where prices, jobs and incomes keep falling on a sustained basis, and the economy keeps contracting -- has become a new cause for worry. Is India on the way of a debilitating deflation?
INDIA is not going through deflation, just disinflation. What we have now is inflation coming down. It is coming off a high commodity price base. Deflation is when prices fall very rapidly and we haven't seen that happening. In a deflation, people stop spending because they believe that prices will fall further. That is not the situation we are in.
Though WPI for all commodities is up 0.1% at 227 (WoW) in the week ended March 14, from 226.7 in the , CPI is still hovers around 9-10 per cent levels from the double digits of 10.75 per cent. The world over, inflation is measured in CPI, not WPI. The fact that CPI is up means that the price level is still very high. The prices of food, primary articles and housing have still not fallen much. So rather than talking about deflation, policy measures should concentrate on how to bring the CPI down.

Friday, January 30, 2009

ZIMBABWE CURRENCY AND 231 MILLION PERCENT INFLATION.....!!

           Bunch of Banana's for 50 CR (1 Million = 10 Lakhs)

100 Lakh Cr (1 Trillion = 1 Lakh Cr)

10,000 Cr (1 Billion = 100 Cr)
SEVEN LAKHS FIFTY THOUSAND

From 1000 Cr to 10,000 CR (1 Million = 10 Lakhs)

50 CR (1 Million = 10 Lakhs)

10 CR (1 Million = 10 Lakhs)

5000 CR (1 Billion = 100 Cr)

ON 18th April 1980 Zimbabwe was born from British colony of Rhodesia & Rhodesian Dollar was replaced by Zimbabwe Dollar at PAR.

In 2004, Zimbabwe’s inflation was 624 %
In February 2007, the central bank of Zimbabwe declared inflation "illegal", outlawing any raise in prices on certain commodities between March 1 and June 30, 2007. Officials arrested executives of some Zimbabwean companies for increasing prices on their products. Such measures, frequently tried during other episodes of hyperinflation, have always failed.  In March 2007, inflation surged to a new high of 1,730%, and in June the government released a figure of 7,638%. The predictions for the annual inflation ranged from 3,000% (according to the IMF) to 8,000%. In fact, inflation that month rose to 11,000% from an earlier estimate of 9,000%. U.S. ambassador Christopher Dell predicted it would reach 1.5 million percent by December 2007, although in the event the IMF estimated a rate of "only" 115,000% for that month, and 150,000% for January 2008. The government then circulated a Z$200,000 note, and reports of extreme shortages of basic foodstuffs, fuel, and medical supplies abounded. The government instituted a six-month freeze on wages on September 1, 2007. Hyperinflation in Zimbabwe began shortly after destruction of productive capacity in Zimbabwe's civil war and confiscation of white-owned farmland.  Food output capacity fell 45 %, manufacturing output 29 % in 2005, 26 % in 2006 and 28 % in 2007, and unemployment rose to 80 %. During the height of inflation from 2008–09, it was difficult to accurately account and monitor for Zimbabwe's hyperinflation because the government of Zimbabwe stopped filing official inflation statistics. This cessation in filing made it difficult to accurately observe how severe inflation was in the country. However, Zimbabwe's peak month of inflation is estimated at 6.5 sextillion percent in mid-November 2008. In 2009 Zimbabwe abandoned its currency; at present in 2012 a new currency has yet to be introduced, so currencies from other countries are used.

Hanke Hyperinflation Index for Zimbabwe (HHIZ)
DateIndexMonthly Inflation RateAnnual Inflation Rate
5-Jan-071.0013.70%
2-Feb-071.7877.60%
2-Mar-073.1476.70%
5-Apr-076.9056.20%
4-May-076.75-2.15%
1-Jun-0720.70207.00%
6-Jul-0753.0060.40%
3-Aug-0749.10-7.29%
7-Sep-0782.5070.60%
5-Oct-07219.00165.00%
2-Nov-07642.00193.00%
28-Dec-072,010.0061.50%215,000%
25-Jan-082,250.0011.80%
29-Feb-088,260.00259.00%
28-Mar-0817,700.00115.00%
25-Apr-0857,100.00222.00%
30-May-08442,000.00498.00%
26-Jun-0823,600,000.005,250.00%41,400,000%
4-Jul-0849,200,000.003,740.00%93,000,000%
11-Jul-0881,800,000.002,080.00%167,000,000%
18-Jul-08122,000,000.001,030.00%250,000,000%
25-Jul-08157,000,000.00566.00%317,000,000%
29-Aug-086,330,000,000.003,190.00%9,690,000,000%
26-Sep-08794,000,000,000.0012,400.00%471,000,000,000%
3-Oct-083,570,000,000,000.0015,400.00%1,630,000,000,000%
10-Oct-0832,300,000,000,000.0045,900.00%11,600,000,000,000%
17-Oct-081,070,000,000,000,000.00493,000.00%300,000,000,000,000%
24-Oct-08124,000,000,000,000,000.0015,600,000.00%26,100,000,000,000,000%
31-Oct-0824,600,000,000,000,000,000.00690,000,000.00%3,840,000,000,000,000,000%
7-Nov-084,890,000,000,000,000,000,000.0015,200,000,000.00%593,000,000,000,000,000,000%
14-Nov-08853,000,000,000,000,000,000,000.0079,600,000,000.00%89,700,000,000,000,000,000,000%
Sources: Imara Asset Management Zimbabwe and author’s calculations
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