INFLATION

B y:
Ajay Singh
Javed Khan
 INFLATION
Inflation is defined as a sustained increase
in the general level of prices for goods
and services.
It is measured as an annual percentage
increase
 INFLATION
Process by which the price level rises and
money loses value
There are 2 types of inflation
1)Demand Pull
2)Cost Push
 Demand Pull Inflation
This type of inflation is a result of strong
consumer demand. When many
individuals are trying to purchase the
same good, the price will inevitably
increase.
When this happens across the entire
economy for all goods, it is known
as demand-pull inflation.
Continue….
Demand Pull Inflation may arise due to :

a)Increase in money supply

b)Increase in Exports
c)Increase in Govt. Purchases
 Cost Push Inflation
Cost-push inflation develops because the
higher costs of production factors
decreases in aggregate supply (the amount
of total production) in the economy. 
Because there are fewer goods being
produced and demand for these goods
remains consistent, the prices of finished
goods increase (inflation).
Continue….
Cost Push Inflation may arise due to :

a)Increase in money wages rate

b)Increase in money prices in raw

material
 Causes of Inflation


Extreme Imbalance of Global Economy

Fuel Price hike
Food Price hike
Higher International Farm Prices
Inflation Graph
C@R$..
 Indian Market
Inflation, the silent killer is now all set to
impact cars.
Companies are doing research to roll out
price hike as they find it hard to manage with
increasing cost of input. 
Raw material for cars like steel, Alluminium,
Nickle, plastic and rubber are being hit by
price rise and so its desirable that it will
affect anything prepared from them. 
Cont….

Itis likely that price of high end vehicles

may go up by Rs. 12000 to 15000 and for
entry level, it may make difference of
4000-6000.

Overall, price rise may be 2-3%

Effect of Inflation on Car Market
Inflation always has a negative effect on
the car market.
The effect of inflation on car market has
badly affects on every sector, which is
associated with vehicle production and
manufacturing.
One of the major effects of inflation is
that the manufacturing of Indian cars has
been hindered to a significant extent.
The effect of inflation on car market has not
only badly impacted the manufacturing and
sales of Indian vehicles but also the vehicle
dealers, employees, and vehicle financers.

The effect of inflation on vehicle

manufacturers have consequently affected the
vehicle dealers in a manner where they are
being forced to thrust the sales curve upward
and maintain a high volume of profit.
Example
Maruti Suzuki
Swift

Toyota
Fortuner
 Maruti Swift
Swift is the main segment
in the car, that lead
to inflation.

It belongs to
Demand Pull Inflation

In Indian Market, Demand of Swift (diesel

version ) increases due to its quality and its price.
Which ultimately leads to Black
marketing

Further, Increase in Demand ,the supply for

swift in the market goes on decreasing.
 Toyota Fortuner
Fortuner:SUV
Range:21- lac-23-lac

Fortuner when launched

was so preferred that their
one year target was completed within
3months of booking
At that time Toyota closed the advance
booking of Fortuner.
Which ultimately leads to Inflation

Effect on Market was that even People

started selling their booked cars to
different people at higher prices.
 Current Scenario
For 2010

Maruti Swift and Fortuner are still in

demand and its demand increasing day by
day, and Supply is still in Progress.
 Future Scenario

For 2011 and above

If the Supply will not be able to fulfill the

market demand….
The Inflation will lead to peak height.
ANY QUESTIONS