What is inflation and what causes it?

A coffee used to cost ₹25 in 2010, and today it costs ₹40—this is the typical example you hear when people explain what is inflation. There's nothing wrong with it, but there's more to inflation than just the price increase. It's important to understand the nuances since, inflation affects everything from how much you can invest to the returns on your investments. Even more so, given the phenomenal spike in inflation across the world, including India.

In this video, Karthik explain what is inflation, what causes it and how do central banks like RBI try to control inflation. Along with the video, we'd recommend you read these two related Varsity chapters:

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[arul_prakash]

One of the best explainers of inflation I saw on YouTube. Keep creating these kind of videos.

[insanelypractical]

Absolutely loved the simplicity of presentation. Thank you sir

[blitz]

You are a genuine person. You are a GURU to many of the market participants. God will definitely bless you with good things because of prayers of people like us. We are very grateful to you.

[Blue_Pumpkin]

Thank you and your Team for the app, the videos, your time, energy and effort. God bless heroes like you.

[ShivamGupta-pyoq]

Thank you sir for explaining in such a simple and lucid way. Loved the content of Zerodha Varsity👍👍

[arindam-karmakar]

Thank you for the simple, yet clear explanation. I'm currently reading the book "Who Moved My Interest Rate" by the former RBI Governor Duvvuri Subbarao, and hopefully this concept of inflation will help me understand some of the topics covered in the book.

[hanandelvi]

Karthik is so hot, any topic becomes really interesting

[manojm]

Can yiu please make a video on correlation between interest rates, bullion, crude, currency exchange rates and what is the sequence of them to be observed that influence the other in terms of stock markets.

[notKhalid]

6:15 OMO and QE are different things; OMO involves central banks buying government securities from the open market in a regular basis when the interest rates are pretty reasonable to affect short term money supply and is part of the conventional monetary policy whereas QE involves buying government securities from the open market when interest rates are near zero aiming for long term, in huge amounts to kickstart the economy and is a part of unconventional monetary policy, the banks are the ones one create money out of thin air through fractional reserve requirements whereas the central bank creates reserves out of thin air which are not fiat, and can only be traded interbank

[gobindagouda]

Such a clarity in understanding...worthful to watch

[manojm]

Thanks Karthik for simplifying the concepts which is a must know in today's world.... wish the program is a perpetuity.

[rohininarayanan]

It's explained so simply yet clearly. Thank you so much.

[MsSumandas]

Come here to say biceps inflation 🙂 Jokes apart You're a very good explainer.

[vivekthombe]

Thanks a lot for a simple explanation ! Appreciate it. Eagerly waiting for you to finish the integrated financial modelling in varsity full pdf. I know you must be really busy, but want to thank you for ur effort... Very valuable teachings and informative study material.

[Rohit-qodw]

Hellow sir this video was amazing 👏 amazing edit of video

[pranavmitan]

Hey Karthik, demand fuelled inflation is due to availability of excessive cash with the public which leads to increase in demand and hence increase in prices and to handle that the govt. decreases repo rates which leads to injecting more cash in banks ( and in turn with the public). In this case, shouldn't the repo rates be increased (or kept as it is) because it is the purchasing power of the public which is leading to the increase in demand. If the purchasing power is reduced (be reducing liquid cash), the demand and in turn prices will also go down. From what I understand the govt injects more liquidity into the market to solve a problem which was in first place caused by excessive liquidity itself. Can someone please help me understand this? Thanks!

[Rohit-qodw]

I want to edit video like you in middle of this session how this is possible pls help me sir I want to give my presentation like you..in my college 🙏🏻 pls sir help me If you