The problem of rising prices is the greatest economics problem in a country today. When the prices of goods and commodities increase over a period of time in a sustained manner, the phenomenon is called inflation. It is measured in terms of an annual percentage change in a price index, which is normally the consumer price index. More and more things are going beyond the reach of common people with each passing day. It has commonly been held that price rises are a normal part of a growing economy Prices of all things have been rising very rapidly. The number of people living below the poverty line is actually increasing instead of decreasing. Prices are bound to increase in a developing economy and there can be no absolute price stability, as such.
Another segment of society that is affected by rising prices is the middle class. A robust part of society, the middle class, now finds itself struggling to make ends meet. These are people who earn a fixed income; they are the salaried class. Unfortunately, their salaries are unable to keep up with the constant increases in prices of necessary goods and commodities. As a result, the gap between the haves and the have-nots increases day by day. The deficit financing in the plans is also responsible for the roaring prices. Some of such reasons are corruption, faulty taxation system, wastage, expenditure on luxuries, excessive profit charged by manufacturers on their products, etc. Control of prices is indeed difficult in such situations.
Whenever such a situation continues for some time, unrest is inevitable. As wage-earners find themselves facing the problems price hikes bring, they start agitating against their employers. There is no proper adjustment between supply and demand. This, in turn, brings a halt to productivity, causing a shortage of goods and a commensurate rise in prices. The whole thing becomes a vicious circle.
While price hikes are inevitable in any economy, uncontrolled or badly controlled increases hit the population of a country hard and amplify the gap between the rich and the poor. The government must take over the trade of important food grains such as wheat, rice, and sugar. In order to have a stable and prosperous society, it is necessary for the powers that be to exercise some measure of control over price hikes. It should be ensured that imports are decreased and at the same time exports are increased.