Inflation is the general price increase caused by factors on both the demand and supply side of the economy. The monetarists say it is brought about by alot of money in circulation which will eventually depreciate in value since money is expected to be a scarce medium of exchange. The Keynesians say it is caused when the aggregate demand for basic commodites like food,fuel prices is higher than the aggregate supply. This is called the supply shock kind of inflation.
However, for it to be controlled, various measures like the monetary and fiscal policies have to work hand in hand. I commend the central bank of Uganda for the wonderful work done so far for lowering the headline inflation rate to 21.2% by March 2012 from 30.4% in November 2011.
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