Sno.

PARAMETERS

Does Inflation Increase by this Parameter?

Affects Which Side
Demand (D) or Supply (S)

Reasons

1

Increase in Income/ Purchasing Power

Yes

D

More money in hands of people 

2

Increase in Cost of Production/Input

Yes

S

Reduced profits and motivation to supply

3

Increase in Money Supply

Yes

D

More money in hands of people 

4

Increase in Printing of New Money

Yes

D

More money supply, more money in hands of people   

5

Increase in Interest Rate

No

D/S

Demand: Less demand for goods & services  

Supply: Raising Capital becomes expensive

6

Increase in Fiscal Deficit

Yes

D

Expansionary Fiscal Policy -> More money in hands of people 

7

Increase in Public Expenditure/ Expansionary Policy/ Fiscal Stimulus

Yes

D

More money in hands of people 

8

Increase in Loan Waiver

Yes

D

More money in hands of people

9

Increase in MSP

Yes

D/S

Demand: More money in hands of farmers  

Supply: Increase in prices of foodgrains  

10

Monsoon Failure

Yes

S

Impacts crop supply, also affects farmers' income

11

Increase in Indirect Taxes

Yes

S

Items become costly

12

Increase in Direct Taxes

No

D

Reduced Purchasing Powers

13

Increase in Inflation Indexed Wages

Yes

D

More money in hands of people  

14

Increase in Population

Yes

D

Rise in demand 

15

Policy Paralysis

Yes

S

Reduced EoDB & motivation to supply 

16

Increase in Net Exports

Yes

S

Supply Scarcity in Domestic Market

17

Increase in Global Oil Commodity Price

Yes

S

Imported Inflation

18

Currency Depreciation

Yes

S

Imports become expensive -> Imported Inflation

19

FDI/FII Inflow

Uncertain net impact

D/S

Supply: Improves supply

Demand: Improved growth & rising incomes