Inflation Control Methods: When the public suffers due to inflation, the government adopts these surefire methods for relief
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Inflation Control Methods: Inflation means rising inflation in the country is one of the biggest problems of the government. It is a situation when the cost of production of goods and services increases significantly, due to which the purchasing power falls. In other words, in this the value of rupee becomes less than its old record data and due to this the prices of commodities have to increase. This is a troubling situation for any government, as it reduces per capita income and has a direct impact on the general public. For this reason, the government uses several methods to control inflation, thereby reducing it. So let’s know about them. Price Controls Price control comes first among the methods adopted to control inflation. Under this, methods like price control and wage control are resorted to. Price control is the setting of prices by the government for essential goods and services, so that the goods are accessible to all even during times of scarcity. Whereas, in wage control, government guidelines are implemented to prevent the price of wages from falling. Monetary Policy In the event of inflation, the Reserve Bank encourages other banks to raise rates on riskier loans, thereby reducing the money supply. This has an effect on inflation. RBI controls the flow of money in the economy through repo rate and reverse repo. These are the rates at which the central bank lends money to other banks.