How does local inflation increase when the currency value decrease in foreign market?

Economist argue that when exchange rate decrease, the inflation increase in local market. I don’t get the link this two factors. can you explain?

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3 Responses to “How does local inflation increase when the currency value decrease in foreign market?”

  1. SDD August 30, 2013 at 1:52 pm #

    Because a lot of what you consume has to be bought in foreign markets. when your currency is worth less, the “local” price for foreign goods goes up.

  2. Mukesch Kaley August 30, 2013 at 2:31 pm #

    the extent of dependence depends upon the imported goods and goods made from imported items , in the country’s consumer market. Besides, the country needs to export more at less margin , so to recover the downturn ..the domestic goods are also possibly sold costlier.

  3. Anjaree August 30, 2013 at 3:09 pm #

    There are two possible causes.
    1. exports increase so that there are less goods left in the country.The domestic price increases.
    2. imports are more expensive, especially oil.If the country’s consumption of oil like this,it is likely not avoidable.

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