Volume 04 Issue 03-2024
183
International Journal of Advance Scientific Research
(ISSN
–
2750-1396)
VOLUME
04
ISSUE
03
Pages:
183-188
SJIF
I
MPACT
FACTOR
(2022:
5.636
)
(2023:
6.741
)
(2024:
7.874
)
OCLC
–
1368736135
A
BSTRACT
In this article, we discussed inflation and its role in the economy. In addition, inflation refers to the quality
of money that leads to an increase in the general level of prices. The level of inflation is represented by an
increase in average prices or a decrease in the quality of money. Inflationary urgency refers to the extent
to which an increase in inflation or a decrease in the quality of money can occur. In general, to determine
the relevance of inflation, it is necessary to compare it with other financial indicators. For example,
resources used for production, goods purchased by consumers, employment, real wages and other
financial indicators are important factors in determining the level of inflation.
K
EYWORDS
Inflation, money, resource, purchase, , consumer, price, growth, funds, quality, freedom, human, retail,
national economic security, supply inflation, hyperinflation.
I
NTRODUCTION
An economic crisis in any country can affect not
only one person, but the entire population. The
results can be detrimental to all areas of life. We
ask the question of understanding what inflation
is, the advantages and disadvantages of the crisis
and whether it can be eliminated. What is
inflation? In this economic period, it means
increasing the value of goods and services. The
essence of inflation is that it becomes possible to
buy less property for the same amount of money
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Research Article
THE EFFECT OF INFLATION ON ECONOMIC DEVELOPMENT
Submission Date:
March 20,
2024,
Accepted Date:
March 25, 2024,
Published Date:
March 30, 2024
Crossref doi:
https://doi.org/10.37547/ijasr-04-03-34
To‘xtasinov Azizbek Abdubannob o‘g’li
Student of Fergana Polytechnic Institute, Uzbekistan
Uzganbayeva Dilnoza Toxtasinovna
Assistant at the Department of Economics, Fergana Polytechnic Institute, Uzbekistan
Volume 04 Issue 03-2024
184
International Journal of Advance Scientific Research
(ISSN
–
2750-1396)
VOLUME
04
ISSUE
03
Pages:
183-188
SJIF
I
MPACT
FACTOR
(2022:
5.636
)
(2023:
6.741
)
(2024:
7.874
)
OCLC
–
1368736135
before its onset. It can be said that the purchasing
power of finances has decreased and they have
lost some of their value. In a market economy,
such a process can manifest itself in rising prices.
With administrative measures, pricing remains
the same, but there may be a shortage of product
groups.
At the same time that the rate of inflation in
Uzbekistan fell to a record level, in many
countries of the world, on the contrary, it
accelerated sharply. For example, in the United
States it reached a record level 40 years ago, and
in Russia five years ago. There are several reasons
for this. The first, of course, is that almost all
countries have eased monetary policy following
the coronavirus pandemic. That is, the
government began to pour more money into the
economy, for example, in the form of direct
payments to the population or cheap loans. As a
result, demand for consumption is increasing, and
production is lagging behind. Another reason is
the devaluation of the national currency. For
example, the Turkish lira has depreciated by
almost 50 percent this year, causing inflation to
exceed 20 percent. In this situation, the Uzbek
soum is strong. In the first ten months, the
currency depreciated by only two percent. Head
of the Central Bank, Mamarizo Nurmatov, said
that a relatively stable exchange rate was
achieved as a result of the 35 percent increase in
foreign currency income due to exports, as well as
the increase in the volume of currency exchange
by banks and exporters. Such phenomena as a
high share of state participation in the economy,
strong dependence on raw materials exports, and
structural imbalances can significantly accelerate
the growth of prices of goods and services,
especially during the period of reforms. Inflation
targeting aims to prevent this from happening.
The low level of inflation means price stability,
which, in turn, has a positive effect on the
standard of living of the population and its labor
activity. It is expected that these factors will
ultimately increase the confidence of the
population in the national currency, reduce the
level of dollarization in the economy, and increase
the volume of domestic and foreign investment.
Inflation is an increase in the overall price of
money in terms of the selling power and a
qualitative increase in funds. In other words,
inflation is an increase in the total price of money
in terms of the selling power and a qualitative
increase in funds. When inflation occurs, the
prices of every sector (such as goods, services,
wages, etc.) will increase, and it can also increase
as funds.
Inflation is generally considered to be one of the
economic problems and there are different types
due to its causes. Then, if inflation occurs at a high
level, it can be harmful to the country, because
funds become loose and people's purchasing
power decreases. States and central banks
regulate financial policies to control inflation.
They try to control inflation by changing the
money supply, credit terms, and other economic
instruments. Inflation rate and cost control
practices are expressed as inflation rate or next
year inflation.
Volume 04 Issue 03-2024
185
International Journal of Advance Scientific Research
(ISSN
–
2750-1396)
VOLUME
04
ISSUE
03
Pages:
183-188
SJIF
I
MPACT
FACTOR
(2022:
5.636
)
(2023:
6.741
)
(2024:
7.874
)
OCLC
–
1368736135
Inflation is inherently volatile, and its effects are
different for different people, businesses,
governments and countries. When inflation is
high, it can reduce the purchasing power of goods
and services, and it can also reduce monetary
freedom. Therefore, advanced policies and
strategies are important to control and reduce
inflation.
There are two main causes of inflation.
1. As a result of the presence of more money in
circulation than the value of goods and services
produced in the country. In this case, the amount
of aggregate demand for goods and services
exceeds the amount of goods and services offered.
Therefore, prices will increase.
2. As a result of the increase in the prices of
resources (labor and raw materials) necessary for
the production of goods. For example, if the cost
of labor resources, i.e. wages, is increased, the
price of goods will increase on the one hand
(because wages are included in the cost of goods),
and on the other hand, the money supply of the
population will increase.
Inflation can be of different types, and each of
them has its own causes and effects. The following
are some of the most popular types of inflation:
1. Som inflation: This type of inflation is
associated with an increase in the supply of funds
and a decrease in the selling power of money. If
the amount of funds occurs, it indicates inflation.
2. Retail Inflation: This type of inflation is
associated with an increase in prices and an
increase in the wage force to increase it. If the
wage force is increased and this increase is
passed on to prices, it causes retail inflation.
3. Structural Inflation: This type of inflation
occurs due to differences between the prices of
goods and services. If the prices of several goods
and services increase, it causes structural
inflation.
4. Tax Inflation: This occurs due to the type of
inflation, tax policy, increase or decrease in tax
revenue and tax support. Tax inflation occurs
when taxes increase or income support
decreases.
5. Import Inflation: This type of inflation occurs
due to the increase in the prices of imported
products entering the country. If the prices of
imported products increase, it causes import
inflation.
These types are only a few examples, and other
types of inflation may exist. Each type of inflation
has its own causes and requires different policies
and strategies to control and reduce it. The
actuality of inflation generally measures the
increase in economic activity and the decline in
the quality of money. High inflation can cause
financial stability, consumer spending and
purchasing power problems. Also, the low level of
inflation will be related to the increase in income
and the increase in spending by consumers.
Inflation is an important financial issue for
governments, financial institutions and other
organizations. There are various policies that are
used to control the inflation rate and bring it
down. Efforts are made to control the level of
Volume 04 Issue 03-2024
186
International Journal of Advance Scientific Research
(ISSN
–
2750-1396)
VOLUME
04
ISSUE
03
Pages:
183-188
SJIF
I
MPACT
FACTOR
(2022:
5.636
)
(2023:
6.741
)
(2024:
7.874
)
OCLC
–
1368736135
inflation and bring it down through financial
policies.
Inflation is an organizational increase associated
with an increase in general prices, representing
an increase in the supply of funds, and a decrease
in the selling power of money. Inflation can be
caused by free growth of money supply, increase
in costs and prices, change in value of currency or
other reasons. Inflation usually causes prices to
rise and the money supply to decrease, so its
effects on politics and the economy are
significant. The fact is that low and predictable
(stable) inflation is a very necessary factor for
stable economic growth in the country.
Consequently, the inflationary expectation is
added to the interest rate when granting a loan by
commercial banks, and a high inflationary
expectation leads to a higher loan interest rate.
Thus, high interest rates calculated for the use of
borrowed funds (loans) by entrepreneurs (under
the influence of high inflation) affect the
payments related to their return. If the interest
rates (calculated for the loan) are high,
entrepreneurs will get less credit. This has a
negative impact on long-term economic growth,
affecting their ability to invest. After all, the
investments we make today serve as an
important tool in creating the main production
resources used in the production of goods and
services tomorrow. Low and predictable (stable)
inflation is one of the necessary conditions for
central banks for sustainable economic growth.
Therefore, maintenance of low and predictable
(stable) inflation is defined by most central banks
as their long-term goal (target).
Anti-inflation policy is a set of measures aimed at
suppressing inflationary processes in the sphere
of state regulation. Anti-inflationary policy is
often implemented in two ways: deflationary
policy and income policy
Deflationary policy regulates the demand for
money through money, credit, tax mechanism. It
is implemented by reducing government
spending, increasing interest rates on loans, and
increasing the tax burden while limiting the
money supply. A deflationary policy leads to a
slowdown in economic growth in any economic
system.
•
Income policy is implemented in the
process of parallel control by completely freezing
prices and wages or setting limits on their growth.
The implementation of income policy often
causes social contradictions. The main focus of
this policy is on price control. These policies
include: Long-term and targeted price control of
certain groups of goods and services offered to
the market by oligopolies or monopolies;
•
Discretionary income management. In this
case, the state acts as a mediator between the
employer and the employee in matters of wages
and working conditions. The last type of policy,
currency policy, helps to strengthen the national
currency. The main anti-inflation measures are as
follows: Clarification policy, the purpose of which
is to establish the most reliable relations with
society regarding public finances and its political
activities. This policy is implemented through the
media;
Volume 04 Issue 03-2024
187
International Journal of Advance Scientific Research
(ISSN
–
2750-1396)
VOLUME
04
ISSUE
03
Pages:
183-188
SJIF
I
MPACT
FACTOR
(2022:
5.636
)
(2023:
6.741
)
(2024:
7.874
)
OCLC
–
1368736135
•
Establishing a stabilization fund, the
purpose of which is to support the national
currency through interventions, as well as to
minimize the cyclical penalty in the economy;
•
Establishing a stable exchange rate, as
well as introducing certain restrictions on
currency and foreign economic policy; Increase
exports and decrease imports to strengthen the
position of the national currency.
In addition to the above, monetary reform and
institutional methods are among the ways to
regulate the inflation rate.
Institutional methods are the unique basis of
positive anti-inflation policy. This implies the
stabilization of market institutions.
Anti-inflationary policy instruments. The main
means of regulating inflation in our country
include credit and monetary policy, through
which the government of the Russian Federation
influenced the money supply in the 1990s.
Define demand-regulating deflationary monetary
policy. This is done by reducing the cost of society
and the state, increasing the discount bank rate,
reducing the demand for loans and increasing
savings, and limiting the demand for money
through taxation to increase budget revenues. the
reserve requirement ratio and the central bank's
sale of fixed-income government securities.
Another weapon of anti-inflationary policy is
income policy, which means parallel control over
wage and price increases. In this process, they are
frozen or limits are set for their growth. With the
help of indexation policy, economic entities'
losses from currency depreciation are indexed.
The government of Uzbekistan periodically
indexes the amount of scholarships, allowances,
pensions, and wages. At the same time, due to the
lack of funds, this indexation is carried out
without the necessary connection with the timely
growth of prices and the amount of reimbursed
expenses.
However,
there
are
several
negative
consequences as a result of these measures. In the
state, arrears, consisting of non-payment of
wages, debts owed by customers to suppliers and
budget debts, appear in large volumes. In such
conditions, an increase in the money supply can
lead to hyperinflation.
Inflation can affect the stability of economic
activity and financial security for people. For
these reasons, various policies and strategies
should be implemented to deal with inflation. For
example, monetary policy, tax policy, revenue
raising, export and import regulation, price
control and other policies are important in
controlling inflation. An important goal of
combating inflation is to stop the free growth of
the money supply and allow the economy to
stabilize by controlling prices. For this reason,
maritime policies and economic development
strategies are important to combat inflation. In
countries with high inflation, governments and
financial institutions use various policies and
tools to control inflation and bring it down.
Through these policies, efforts are made to
maintain financial stability and increase
purchasing power for consumers.
Volume 04 Issue 03-2024
188
International Journal of Advance Scientific Research
(ISSN
–
2750-1396)
VOLUME
04
ISSUE
03
Pages:
183-188
SJIF
I
MPACT
FACTOR
(2022:
5.636
)
(2023:
6.741
)
(2024:
7.874
)
OCLC
–
1368736135
In countries with high inflation, governments and
financial institutions use various policies and
tools to control inflation and bring it down.
Through these policies, efforts are made to
maintain financial stability and increase
purchasing power for consumers.
Inflation is a global financial problem today and
can affect international trade and foreign
exchange markets. This can affect the economic
activity and financial stability of countries.
Governments, financial institutions, and other
organizations use various policies and tools to
control inflation and bring it down. Inflation
problems and their solution are one of the
important financial issues for countries, and
actions to solve them are on the way.
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