inflation.docx - Inflation Inflation is one of the major concerns of macro economy It is the sustained rise of general price level and fall of value of

inflation.docx - Inflation Inflation is one of the major...

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Inflation Inflation is one of the major concerns of macro economy. It is the sustained rise of general price level and fall of value of money of a certain economy during a period of time. High and variable inflation distorts the smooth functioning of the economy. That is the reason that every economy tries to attain the price stability at the rate of the inflation where the economy will be able to absorb it and gain economic prosperity. This objective is tried to accomplish by the monetary policy formulated by the central bank of each country. For Nepal, NRB formulates the monetary policy. In Nepal, there are three main price indices, namely, Consumer Price Index (CPI); Wholesale Price Index (WPI); and the Salary and Wage Rate Index (SWRI). However, the CPI is the official measure of price level in Nepal. This is because CPI measures inflation impact which is the final measure of prices on households. Measurement of prices in Nepal began from 1973 using the expenditure weightage of the goods and services of the people obtained from first HBS. Prior to that, equal weights were assigned for
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