at present inflation is ascertain by wholesale price

index,but now it is switching to ppi(purchase price

index).if we want to tame inflation then first we have to

acess whether it is demand side or supply side inflation if

it is supply side inflation then a country have to increase

the farm productivity because people are demanding same or

more but output is not available to general people at

present this can be seen in india that govt. is relying more

on monetary tightning but inflation isnot reducing since

demand is appropriate acc. to economic growth but supply is

inadequate.

but if it is a demand side inflation then monetary

tightening will work,since people have more disposable

income and supply is in accordance with economic growth so

reducing money or liquidity in system will lead to

equilibrium position.