Inflation in Bangladesh and Its Reason and Solution
Executive Summery
There are number of factors behind the rising trend of inflation in Bangladesh. The factors contributed the most in the rise hike of essential items, particularly food, are slow growth in agriculture, rise in the world prices of food items, sharp depreciation of taka against US dollar and especially against the Indian rupee, and rise in the prices of diesel and kerosene. These causes affect our general people directly. As per capita GDP is not responding with inflation, purchasing power of people has shrunk drastically. Food inflation is causing more problems for rural people than urban people. And loss of Taka’s value is making people go down class hierarchy. We recommend that Bangladesh Bank should take necessary steps to reduce inflation rate. We have to be concerned about devaluation of our currency. Inflation is a complex, dynamic process which cannot be comprehended simply through occasional debates or newspaper articles. Rigorous research is needed to understand inflation dynamics and its implications for monetary policy. Much of the responsibilities lay within the purview of local universities, policy institutes, and in particular the Bangladesh Bank.
Table of Contents
Introduction
Inflation is an increase in the amount of currency in circulation, resulting in a relatively sharp and sudden fall in its value and rise in prices: it may be caused by an increase in the volume of paper money issued or of gold mined, or a relative increase in expenditures as when the supply of goods fails to meet the demand.
This definition includes some of the basic economics of inflation and would seem to indicate that inflation is not defined as the increase in prices but as the increase in the supply of money that causes the increase in prices i.e. inflation is a cause rather than an effect.
Inflation's effects on an economy are various and can be simultaneously positive and negative. Negative effects of inflation include a decrease in the real value of
There are number of factors behind the rising trend of inflation in Bangladesh. The factors contributed the most in the rise hike of essential items, particularly food, are slow growth in agriculture, rise in the world prices of food items, sharp depreciation of taka against US dollar and especially against the Indian rupee, and rise in the prices of diesel and kerosene. These causes affect our general people directly. As per capita GDP is not responding with inflation, purchasing power of people has shrunk drastically. Food inflation is causing more problems for rural people than urban people. And loss of Taka’s value is making people go down class hierarchy. We recommend that Bangladesh Bank should take necessary steps to reduce inflation rate. We have to be concerned about devaluation of our currency. Inflation is a complex, dynamic process which cannot be comprehended simply through occasional debates or newspaper articles. Rigorous research is needed to understand inflation dynamics and its implications for monetary policy. Much of the responsibilities lay within the purview of local universities, policy institutes, and in particular the Bangladesh Bank.
Table of Contents
Introduction
Inflation is an increase in the amount of currency in circulation, resulting in a relatively sharp and sudden fall in its value and rise in prices: it may be caused by an increase in the volume of paper money issued or of gold mined, or a relative increase in expenditures as when the supply of goods fails to meet the demand.
This definition includes some of the basic economics of inflation and would seem to indicate that inflation is not defined as the increase in prices but as the increase in the supply of money that causes the increase in prices i.e. inflation is a cause rather than an effect.
Inflation's effects on an economy are various and can be simultaneously positive and negative. Negative effects of inflation include a decrease in the real value of
References: Journals: * Bangladesh Economic Review (2009-10)