Inflation Demystified

Article by: Mridusmita Choudhury. Courtesy: Content Castling

What is inflation?
In simple terms, inflation is the increase in the price of goods and services, and the inflation rate is the rate at which such increase takes place. Let’s say, the price of apple increases from Rs. 100 per kg to Rs. 110 per kg. It is inflation. The inflation rate of apples is (110-100)/100= 10%. Inflation decreases the worth or value of money. 100 rupees could buy 1 kg of apples previously, but now 100 rupees can buy less than 1 kg of apples, as 1 kg of apples cost 110. Hence, the purchasing power/ worth of money declines if there is inflation.

Tax Free Bonds Baffled. Discharge Voucher issue settled.

For this blog post, I have picked up two recent developments from our universe of Personal Finance.

The first is about the amazing (but completely baffling) response to the two recent public issues of tax free bonds.

New base rate formula to ease our interest burden

While writing about the RBI rate cut bonanza last week, I had mentioned that slashing the interest rates by 0.50% is not the end of the story.

More rate reductions could be forthcoming, due to other policy announcements... one being the revised methodology for the Base Rate calculation.

Submit Form 15G or 15H, simply at click of a mouse

As you are aware, subject to certain conditions, you can furnish self-declaration Form 15G / 15H to banks, for not deducting TDS on your Fixed Deposit interest income. For details see Form 15H And 15G Decoded.

The Income Tax Department has now simplified the process of filing your Form 15G / 15H.

Security of Rs.1000, Rs.500 and Rs.50 notes being enhanced

Some time back, in my blog post How to spot a fake Rs.500 banknote, I had listed the 11 security features that you would find on a Rs.500 banknote.

RBI now proposes new / revised security features on the notes of denominations Rs.50, Rs.500 and Rs.1000.

RBI rate cut bonanza! Will banks too surprise us?

RBI Governor Dr. Raghuram Rajan has announced (i) a steep 0.50% cut in the policy interest rates, in his 4th bi-monthly monetary policy statement 2015-16 and (ii) other rate-slashing measures.

The moot question, however, is... will banks too cut rates on our loans? And, if yes, by how much; and when?

Why Mutual Fund NAVs won't double in a day?

Stock prices can double in a matter of days. But, mutual fund NAVs will "never" go up so fast.

Do you know why?

More importantly...
... do you think this makes mutual funds "inferior" to equity shares?

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