Monday, March 31, 2008
Inflation - Production Vs Consumption
Usually we always dread the word inflation, but actually speaking it is nothing more than the trend analysis of consumption vs production. We should always try to be proactive and not reactive in case of production. As the urban population rises, there will always be a supply side constraint, since the food crops are usually a produce of rural areas. In addition we have to use the statistical tools appropriately in case if we have to be effective in curtaining the input cost. There are other aspects like the cost of production at the point of production should not vary drastically with that of point of sale. For this we have to have measures like having a constant monitoring at all places of sale/purchase of the products in case of essential commodity. And last but not the least in case if the price has gone beyond our expectations we should have an alternative for example. If the consumption of wheat is more, then is there a substitute yes we have rice as a substitute. If crude is going beyond certain level, can we have a blend of ethanol with that of petrol not as an option but as mandatory to curtain the impact of importing crude on the economy? These are the simple measures that we can apply to ease the adversities of impact of rising commodities on any given economy.
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