Measures to Control Inflation

There are several steps to effectively control inflation before it gets out of hand. Given that inflation shows the imbalance between supply and demand of goods at current prices so that measures be taken to reduce demand or increase supply of goods and services. The following are some important steps you should take into demand and supply.

The supply side

Increased Production

The supply of goods and services can be increased by increasing agricultural and industrial production. Agricultural production can be increased by providing an adequate supply of agricultural inputs at low prices, the modernization of agriculture and scientific farm management, adequate water supply for irrigation, industrial production etc similarly can be increased by increased foreign direct investment, industrial credit growth, fiscal concessions, etc.

Control of illegal Activities

There are some illegal activities that cause significant inflation in a country. It is hoarding, smuggling, profiteering, black markets, etc. In the case of smuggling of large quantities of staples like sugar, butter, wheat, rice, etc are exported abroad illegally in order to obtain higher prices. Similarly, the shortage in most cases artificial staples to create higher profits. All activities of this evil must be controlled through advertising, as well as punishment.

Peace and Security

Production and distribution of goods and services can be effected due to the existence of unease and insecurity in society. In such circumstances, investors hesitant to invest for fear of potential loss. Similarly, the production of industrial products is affected due to several unpleasant events such as strikes public etcpor therefore peace and security must be ensured to maintain the supply of goods and avoid the danger of famine.

Main Energy Sources

The supply of agricultural and industrial products is highly dependent on energy availability. If the energy source is expensive, the cost of production of goods and services will be expensive too. Increased production costs raise prices and cause inflation. Therefore all necessary measures be taken to provide major sources of energy in industrial and agricultural sectors of the economy.