Inflation is the progressive decline in the purchasing power of money, or simply an increase in the price you pay for

goods. Inflation comes in two forms, namely monetary inflation, and Price inflation. On the one hand, price inflation means that more money is spent buying the same amount of goods. On the other hand, monetary inflation is an increase in the supply of money, due to an increased monetary supply. Excessive money creation then causes price inflation. Therefore, monetary inflation can be loosely defined as too much money chasing too few goods. Causes of inflation. 1. Excess printing of money A surplus in new currency causes an excessive demand for goods. This surplus makes people feel richer, thus the general demand for goods is much higher than the need for these goods, and in turn, this pushes the price of these goods higher. This debases the currency. 2. Rising labor costs Wage increases, which do not reflect an increase in productivity, cause an increase in the price of goods. If the cost of labor increases, manufacturers, wholesalers, and retailers price the same commodity differently to realize profits. 3. Rising production costs manufacturing costs keep rising, and so do the prices of raw materials. The price of the finished product rises, so that profits are constant. 4. Demand-pull inflation When the demand for a commodity is higher than its availability, manufacturers and sellers price these goods such that the demand and supply is equal.

5. Elevated lending rates The government prints fresh currency continuously to assist in settling the national debt. This is because the debt has to be settled, and so does the interest that comes with such debts. 6. Population growth - An increase in the population will inevitably cause a higher demand for basic commodities; exacerbate unemployment thusly-increasing crime. In third world countries, inflation continues to rise persistently. With this unrelenting rise in the price of basic commodities such as food, fuel, things can only get worse. Poor and middle class citizens from third world countries continue to suffer and are the hardest hit by the inflation. Butter, meat, lunch, even the once ubiquitous morning mug of coffee - have all become unimaginable luxuries. The most cited case in point is Zimbabwe, where there has been a sustained rise in inflation, which has largely gone unchecked by the government. This is largely because of a surplus of money, not supported by growth in the production of goods and services. This has caused an exponential increase in the cost of goods. Citizens from third world countries continue searing in the heat of skyrocketing prices. Yet, consumers salaries have reached a plateau, limiting their power to fork out more for goods. The effects are worrying. 1. Lower standard of living Citizens make cutbacks to spend less and less, since most incomes do not keep up with the rising cost of basic amenities. Let us not ignore the fact that most households already live in squalor and near abject poverty.

2. Loss of jobs due to rising labor costs, managers, in an effort to keep these costs at their minimum and increase/maintain profit margins, fire employees. In turn, employment stops. Innocent citizens therefore risk/end up becoming collateral damage. 3. Crime and Prostitution inflation, the soaring cost of goods, and in some cases the loss of jobs, will invariably drive citizens to despair, thus an indulgence in vice, namely prostitution and crime in this particular case. The high dropout rate in schools further complicates it. 4. Social Instability Recently, In Tunisia, there was widespread unrest, sparked after a young man, Mohammed Bouazizi, set himself on fire, acting out of desperation. Inflation, rampant unemployment, poverty, and appalling job prospects, were the primary cause of this turmoil. 5. Reduction in the price of savings Money that saved in banks begins to lose value. The value of money held in banks continually erodes over time. 6. Increase in tax (Inflationary tax) This primarily affects anyone who has cash. Money supply increases to cater for its accrued debts. 7. Inflation can get out of control - price increases leads to higher wage demands as people try to maintain their living standards. This will in turn cause a wage-price spiral. 8. Inflation may favor borrowers at the expense of savers because inflation erodes the real value of existing debts, people who save money in banks see their money lose value, while creditors end up paying money of lower value than that they borrowed. 9. Shortage of goods An imminent price hike may cause hoarding/ buying in surplus. This compounds the problem, in that prices goods become scarcer, and prices rise even further. This becomes a vicious cycle.

Up until we understand the causes of inflation properly, we cannot take any definitive steps to combat it. Mechanisms put in place to combat inflation are more or less methods suggested to prevent inflation from stretching the family budget. 1. Look for other ways to earn money This will provide a cushion against rising prices, and in case of job loss, provide a much-needed plan-B. 2. Cycle to work The price hikes of diesel and petrol are unceasing. Cycling to work, for those whose place of work is not too far from their place of abode, is not only healthy, but also a cheaper alternative. Moreover, it also translates to less time spent in traffic, and as a result, more time spent working. 3. Discount prices It is becoming increasingly prudent to wait until a discount on items is given. Shopping at discounted prices is cheap and relatively more affordable. 4. Convert you money into gold Gold and other precious metals act as a sort of safety net against inflation. The harsh reality is, with the recent incessant increase to the price of basic commodities, we desperately need to assuage this situation lest it gets any worse than it is now. If this goes on unchecked, it is just a matter of time before guileless citizens begin to feel overstretched. Reviewing history is a great idea. That is the only way to make things change if we are to curb this runaway inflation and prevent a repeat of the same.

Robert Ernest Hall (1982), Inflation, causes and effects Leon N. Lindberg, Charles S. Maier, Brian M. Barry (2001) , The Politics of inflation and economic stagnation: theoretical ... Helmut Frisch(1983) , Theories of inflation