“MANAGING INFLATION AND ITS IMPACT ON THE ECONOMY”

Аннотация

This article analyzes the impact of inflation on the economy, its causes, and management methods. It deeply examines the negative effects of inflation on the country's economic stability, the living standards of the population, and the pressure on production. The role of monetary and fiscal policies in controlling inflation, the policies of the Central Bank, and explanations based on statistical and graphical analysis are discussed. The situation of Uzbekistan's economy is analyzed, and recommendations for effective management are provided. Thearticle has practical significance forstudents, specialists, and economists. Keywords: inflation, economic growth, monetary policy, price level, central bank, monetary policy, Uzbekistan’s economy Annotatsiya: Ushbu maqolada inflyatsiyaning iqtisodiyotga ta’siri, uning sabablari va boshqarish usullari tahlil qilinadi. Inflyatsiyaning mamlakat iqtisodiy barqarorligiga salbiy ta’siri, aholi turmush darajasi va ishlab chiqarishga ko‘rsatadigan bosimi chuqur o‘rganiladi. Shuningdek, inflyatsiyani jilovlashda pul-kredit va fiskal siyosatning o‘rni, Markaziy bank siyosati, statistika va grafik tahlillar asosida izohlanadi. O‘zbekiston iqtisodiyotidagi holat tahlil qilinib, samarali boshqaruv bo‘yicha tavsiyalar beriladi. Maqola talabalar, mutaxassislar va iqtisodchilar uchun amaliy ahamiyatga ega. Kalit so‘zlar: inflyatsiya, iqtisodiy o‘sish, pul-kredit siyosati, narxlar darajasi, markaziy bank,monetarsiyosat, O‘zbekistoniqtisodiyoti Аннотация: В данной статье анализируется влияние инфляции на экономику, её причины и методы регулирования. Глубоко изучено негативное воздействие инфляции на экономическую стабильность страны, уровень жизни населения и давление на производство. Также рассматривается роль монетарной и фискальной политики в сдерживании инфляции, объясняется политика Центрального банка на основе статистических и графических анализов. Анализируется ситуация в экономике Узбекистана и даются рекомендации по эффективному управлению. Статья имеет практическую ценностьдля студентов,специалистови экономистов. Ключевые слова: инфляция, экономический рост, монетарная политика, уровень цен,центральныйбанк,денежно-кредитная политика,экономикаУзбекистана. INTRODUCTION. In the modern process of economic development, inflation is considered one of the most important and pressing issues. Inflation is the continuous and persistent rise in the general price level in a country. It affects all sectors of the economy, negatively impacts the real incomes of the population, and destabilizes the investment environment. Therefore, managing inflation is one of the priority areas of any country's economicpolicy. In the following pages, the theoretical aspects of inflation, its types, causes, management mechanisms, statistical indicators, and analysis based on the real situation in Uzbekistan are discussed. The term "inflation" originates from the Latin word "inflatio," meaning "swelling." This https://ijmri.de/index.php/jmsi volume 4,issue3,2025 850 term was first used in the United States during the 1860s Civil War to describe the situation caused by the excessive increase in the money supply. Inflation is the decline in the purchasing powerof money resulting from astable and continuous increase in thegeneral price level. In economic theory, inflation has been interpreted differently. Classical economists mainly linked inflation to the growth of the money supply. For instance, according to David Ricardo and Adam Smith, if the amount of money in circulation increases without a correspondingincrease in goods, prices rise. Keynesians, on the other hand, believe that inflation results from the imbalance between aggregate demand and supply. They emphasize that when aggregate demand in the economy exceeds production capacities, prices rise, leading toinflation. Monetarists, particularly Milton Friedman, define inflation as a "purely monetary phenomenon everywhere and always." According to him, the main cause of inflation is the excessiveissuanceof money bythecentral bank. Modern economic approaches recognize that inflation is caused by complex factors, including the increase in the money supply, the rise in production costs, insufficient regulatory mechanisms, trade imbalances, and exchange rateinstability. METHODS. The Consumer Price Index (CPI) is often used as a measure of inflation. This index reflects the change in prices for a selected basket of goods and services. Inflation can also beclassified based onits level: -Moderate Inflation (3–10%): Stimulates theeconomy. -High Inflation (10–50%): Disrupts theeconomy. -Hyperinflation (50% and above): Leads toeconomic collapse. Stable management of inflation is crucial for ensuring economic growth and macroeconomicstability. Causes of Inflation and Their Manifestations . The causes and forms of inflation are closely related to economic imbalances, market participant behavior, and global factors. Generally, thecauses ofinflation can becategorized