(A) Price rise is beneficial to economic development: Moderate price rise, along with economic stability is beneficial to economic development. Increase in price of the manufactured goods means increase in the profit for the entrepreneurs. The entrepreneurs strive to increase their profit by reducing the cost of production. The profits provide capital required for the new ventures.

New production units create more employment. They offer higher wages and better service conditions to the workers. Better wages means increase in purchasing power. People spend money to improve their standard of living. Thus price rise gives momentum to industrialization and industrialization serves as engine of economic development.

(B) Price rise is a hindrance in economic development: Unrestrained price rise is called hyper-inflation. It is a hindrance to economic development. It results in the fall in the value of money and purchasing power. The high prices of goods and services are beyond, the reach of common people. The middle class and the poor suffer. It reduces saving and adversely affects capital formation.

High volatility in economy discourages the entrepreneurs from launching new ventures. The entrepreneurs prefer production of luxury goods and neglect production of the essential goods to earn more profit. The scarcity of essential goods leads to hoarding and black marketing. Economy loses its momentum due to the chaos created by the hyperinflation. Thus, price rise is a hindrance in economic development.