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RE:Inflation down, but why are prices not dropping?
by R CHANDRAHAS on Jul 30, 2007 10:01 PM

You have not understood the concept of inflation. It is simple arithmetic. The Cost of a shirt was Rs. 100/- in the base year. Nest year it doubles to Rs. 200/-. Here the rate of increase of the prices ( related to inflation) is 100%. But what happens the very next year when the prices goes up from Rs. 200/- to Rs. 300/-. The rate of increase is only 50%. Thus even though there is a fall in the incremental rate ( inflation rate) the price is still increasing. Hope you got the maths behind it. Best of luck with the inflation.
Regards,
R.Chandrahas

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Why are prices not dropping?