Article summary for UPSC Exam -
Low inflation is challenging for the government because it leads to weaker nominal GDP growth, which in turn reduces tax revenues and makes it harder to meet budget and deficit targets
Despite benefiting consumers, subdued inflation means budget assumptions may not be met and fiscal management becomes more difficult for policymakers
Key concepts used in the article -
Nominal GDP refers to the total value of goods and services produced at current market prices, without adjusting for inflation
CPI (Consumer Price Index) measures average changes in prices paid by consumers for goods and services
WPI (Wholesale Price Index) tracks prices of goods sold in bulk and traded between businesses
Low inflation is challenging for the government because it leads to weaker nominal GDP growth, which in turn reduces tax revenues and makes it harder to meet budget and deficit targets
Despite benefiting consumers, subdued inflation means budget assumptions may not be met and fiscal management becomes more difficult for policymakers
Key concepts used in the article -
Nominal GDP refers to the total value of goods and services produced at current market prices, without adjusting for inflation
CPI (Consumer Price Index) measures average changes in prices paid by consumers for goods and services
WPI (Wholesale Price Index) tracks prices of goods sold in bulk and traded between businesses
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