Inflation issues are widely covered by a variety of state institutions, ranging from the media, ending with the government and various kinds of analysts. But this is more theoretical reasoning aimed at solving certain problems of a particular group of people. More seriously, this issue is of interest to ordinary citizens, not in macroeconomic terms, but in everyday, one might say, everyday. This issue is not ignored by representatives of medium and small businesses. So what, in fact, is this indicator of the economy so important, because usually people perceive inflation only as a factor in raising prices?
Estimation of inflation expectations
The fact is that inflation is largely capable of influencing such an indicator as the rate of return. To begin with, in the context of inflation, the pricing policy of any enterprise cannot be predicted without taking into account inflation expectations, in other words, without an adequate assessment of possible changes in prices, as in the market of services or products manufactured, but also in the market of raw materials, components, etc. .d. It is particularly difficult to forecast financial profitability in the conditions of so-called unstable inflation, the changes of which are difficult to predict. And if in the conditions of a short-term forecast this task can be solved with a greater degree of accuracy, then in the long run it is very difficult to get the right result - the rate of return becomes almost unpredictable. In order to correctly assess inflation expectations in the field of the pricing strategy of an enterprise or other business entity, it is advisable to use the so-called price indices. These indices are accepted in social and economic calculations, as well as in the practice of statistical research.
Inflation calculation
In practice, the calculation of inflation expectations includes five main stages. First, financial profitability in the future depends on a competent and complete specification of price dynamics, especially those that are subject to forecasting. It is also necessary to determine the actual forecast period, such as long-term, short-term or medium-term. If profitability shows production inefficiency at a certain forecasting interval, then a number of changes must be made to the business planning of the enterprise itself. Secondly, it is worth analyzing in the most careful way how the rate of return for the previous period looked, as well as all analytical indicators of inflation, up to the factors that determined it. Thirdly, it is worth identifying and taking into account all the factors that in the future will be able to influence the inflation rate , taking into account their percentage impact. Next is the calculation of possible inflation itself. And the last stage is a probabilistic assessment of all possible options for the development of a particular situation - from pessimistic to, respectively, optimistic.
Inflation, of course, is an inevitable process in any society. It only confirms the rule of the time value of any money. This means that the same amount of money is more valuable today than tomorrow or, especially, the day after tomorrow. It follows that if profitability at a given enterprise shows low growth rates, then in the future production efficiency will invariably decrease due to depreciation of assets. As a conclusion, the rate of return of any enterprise should be planned taking into account all possible risk factors , including taking into account the inflation rate, as well as its objective indicators. It is worth remembering that the correct calculation of inflationary expectations may allow a more adequate forecast of further pricing policy.