1.1 BACKGROUND OF THE STUDY
Inflation can be defined as the persistence rise an prices of goods and service due to the volume of money in circulation. This is an increase in the money and credit relative to available goods and service resulting in a general price level. In order to observe that there is inflation there should be a rise in the volume of money credit. This rise must exceed the available goods and service an the country. There should a the substantial and centurial increase in the gene price level of goods and services.
Rise in prices may be of various magnitudes accordingly different names have been given to inflation depending upon the rate of rise in prices .if the prices of goods and service rise this in just saying that the value of money has fallen because less goods and service can now be obtained in exchange for a given sum of money. Prices vary inversely with the value of money. The value of money is this shown by the level of prices a general fall in process indicates rise on the value of money. The price of a commodity is the amount of money that has to be paid for it. The value of money is the quality of goods and service it will buy. The market price is the indicator of relative value of goods and service in terms of money.