Anatomy of inflation

The whole country is under grip of inflation. Inflation has been flying so high for the past year that it has become a major political issue. But how much worrisome is the inflation. Last week we had inflation of 18.32 %. It is like a tax of 18.32% imposed on income of every person of the country regardless of his income levels.

But what is cause of inflation. Most newspaper article that i read describe the cause of inflation as rise in food prices. It has been argued that scarcity in food items is driving the inflation. But i disagree as i believe that the main reason for current inflation is growth in money supply.

During and before monsoons the arguments were given that reason for inflation is low base during the years of recession. But even after a good monsoon and base effect having gone, the Indian economy is saddled with a huge inflation. Then the reason which was given was that Indian economy is heating up and that's why food prices are going up. But this reason is also wrong because inflation can be only sustained if and only if government is printing too much money.

So the reason for inflation is government printing too much money. But inflation hits hardest the lowest rung of the society. Its where is the vote bank of the government. So why does government is printing so much money. Its because government has to run so many development programs. So the government is printing money to finance the development programs for the poor but it is only harming the poor through inflation. People who have access to capital and education are becoming richer. And people who don't have access to these things cannot participate in economic development and are only becoming more poor due to inflation