What is inflation? Compare its role with money and the real earning of the Industrial workers.

The term inflation is used for an overall increase in the
price of goods and services in the economy. Inflation is most commonly estimated by
looking at the change in certain price indices. These indices are created to estimate
inflation and contain all goods and services generally used by consumers with an
appropriate weightage given to each item that reflects the quantity consumed. Inflation
over a year can be calculated by looking at the percent change in the present value of
the index from the value it had a year back.

A positive
inflation indicates that the average price of things in the economy is rising. It means
that a person with the same amount of money can now buy less than what could have been
bought a year back. High rates of inflation rapidly decrease the buying capacity of
money. In such a case an industrial workers' capacity to buy products would rapidly
decrease and even an increase in wages would only allow them to buy what they could
earlier, nothing more.

Government policies should always be
such that the rate of inflation is positive though at a fairly low
level.