ACADEMIC RESEARCH IN MODERN SCIENCE
International scientific-online conference
88
THE IMPACT OF INFLATION ON THE NATIONAL ECONOMY AND
MEASURES TO PREVENT IT
Yerejepova Bibisara Abibullaevna
Associate Professor, PhD,
Karakalpak State University, Uzbekistan
Davlatboyeva Iroda Otabek qizi
Student of Management Program
https://doi.org/10.5281/zenodo.15549700
Abstract:
This article analyzes the impact of inflation on the national economy and
the measures to prevent it. The causes of inflation, its influence on the national
economy, price increases, savings and investments, and its effect on
unemployment are studied in detail. Inflation management strategies such as
monetary policy, fiscal measures, and price control mechanisms are discussed.
Using the example of Uzbekistan’s experience, effective inflation management
practices are highlighted and strategies necessary for the future are proposed.
The article emphasizes the importance of controlling inflation to ensure
economic stability.
Keywords:
inflation, national economy, monetary policy, fiscal measures,
unemployment, demand-pull inflation, cost-push inflation, global economic
factors, price control.
Introduction
Inflation is the general increase in the prices of goods and services in a
country and is considered one of the most pressing economic problems. Due to
global economic crises, pandemics, energy shocks, and geopolitical tensions,
inflation rates are rising. Disruptions in global supply chains and increases in
energy resource prices negatively affect price stability. Therefore, controlling
and managing inflation has become a top priority in national economic policy.
Causes of Inflation
The inflationary process arises from several factors, with monetary policy
being one of the main contributors. If the money supply grows faster than
production, inflation occurs. Especially after the pandemic, many countries
implemented economic stimulus packages that significantly increased the
money supply, leading to price hikes.
Cost-push inflation occurs when the costs of raw materials, energy, labor,
and other production factors increase. Recently, rising global energy prices have
further accelerated this process.
ACADEMIC RESEARCH IN MODERN SCIENCE
International scientific-online conference
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Another contributing factor is demand-pull inflation, which occurs when
increased consumer demand exceeds the production capacity. For instance,
disruptions in global supply chains after the pandemic led to higher demand and
price hikes.
Additionally, global economic factors also influence inflation. Rising prices
of imported goods, fluctuations in currency exchange rates, and international
trade restrictions all affect national inflation.
Impact of Inflation on the National Economy
Inflation significantly impacts the national economy. Firstly, rising prices
reduce the purchasing power of the population. If income remains unchanged
while prices rise, consumers can purchase fewer goods and services, lowering
their standard of living.
Savings and investments also suffer from inflation. The devaluation of
money leads to decreased value of savings and fewer long-term investments,
slowing economic growth.
Inflation also affects unemployment. Rising production costs can lead some
enterprises to downsize or face bankruptcy. Furthermore, high inflation reduces
the competitiveness of the national economy.
Although currency depreciation can make exports cheaper, increased
domestic production costs due to inflation can hinder international
competitiveness. The higher the inflation, the more expensive raw materials,
energy, and other inputs become, raising production costs and making products
less competitive in global markets.
Inflation Management Strategies
Managing inflation is a vital part of government policy. Various strategies
are used to control it effectively. One of the key strategies is monetary policy.
The central bank ensures price stability by adjusting the money supply and
interest rates. Raising interest rates and limiting credit can reduce inflationary
pressures and improve the competitiveness of domestic products.
Fiscal measures also play an important role. Reducing government
spending and increasing taxes can lower internal demand and help balance the
state budget.
Price control mechanisms are another effective tool. Setting maximum
prices for essential goods like food and energy helps prevent sharp price
fluctuations and protects the standard of living.
Additionally, the government combats artificial price inflation caused by
collusion among companies through competition protection laws.
ACADEMIC RESEARCH IN MODERN SCIENCE
International scientific-online conference
90
Conclusion
In conclusion, inflation poses a serious threat to the stability of the national
economy. Effective inflation control can ensure price stability, preserve the
value of the national currency, and improve the living standards of the
population. Based on Uzbekistan’s experience, it can be concluded that with the
right policies, inflation can be managed and controlled. Implementing more
effective measures in the future will contribute to stabilizing economic growth
and reducing inflation.
References:
1. Omonboyev, S. & Abduvahobov, Sh. X. (2024). Inflation: Social Consequences
and Reduction Methods. Education, Science and Innovative Ideas in the World,
43(7), 133–139.
2. World Bank. (2025). Uzbekistan Shows One of the Highest Growth Rates in the
Region. Vzglyad.uz.
3. Shkliarevsky, G. (2023). Inflation and Value Creation: An Economic and
Philosophic Investigation. arXiv preprint arXiv:2301.03063.
4. Karimov, D. M. (2023). The Impact of Inflation on the National Economy and
Strategies for Its Reduction. Journal of Economics and Management Research,
12(3), 45–53.
5. Central Bank of the Republic of Uzbekistan. (2024). Inflation Forecast for
2024.
