Topic: Give a description about

inflation in BD. Do you think that,

inflation is better for the economy?
Inflation in Bangladesh: Inflation in Bangladesh and other
countries is usually calculated as the percent change in the
consumer price index (CPI) from one year to the next. The CPI
represents the prices paid by the average urban consumer in each
respective country. Inflation can also be calculated with other price
index such as the producer price index or the so-called GDP deflator.
Bangladesh witnessed a declining trend in inflation in last eight
consecutive months as the country’s general inflation rate came
down to 5.57 percent in ay from 6.04 percent in October last year.
The inflation rate in May was the lowest during last eight months in
the current fiscal year. The inflation rate increased to 6.12 percent
in September, the highest rate in this fiscal year, according to the
monthly consumer price index (CPI) of Bangladesh Bureau of
statistics (BBS).
Most countries try to keep inflation somewhere around 2-3 percent
per year. That is too low to cause any problems for the businesses
and households. At the sometime, it’s comfortably away from
negative inflation. Whereas , inflation rate in Singapore 0.90%,
Taiwan 1.00% , china 1.80% , united states 2.10% , UAE 2.10%,
Malaysia 3.80%, India 3.80% , Pakistan 4.10% according to recent
report of inflation ranking around the world.
However, inflation rate of Bangladesh is comparatively high, and it
has historically moved proportionately with food prices.
The current government has taken a number of positive steps in
keeping food prices as well as general non food prices under control.
These measures need to be further sharpened and is enforced in
order to close the policy loopholes that still exist. This will help to
keep the overall inflationary environment in the country under
control.

Is inflation better for the economy: Inflation is a relative

concept, the utility of which varies from economy to economy. It is
good for some economies, whereas it is bad for some.
Inflation is good when it is mild. There are two situations where this
occurs. There are two situations where this occurs. The first is when
inflation makes consumers expect prices to continue rising. When
prices are going up, people will buy now rather than pay ore later.
This increases demand in the short term.
The second is when it removes the risk of deflation. That’s when
prices fall, when that happens people wait to see if prices will drop
ore before buying. Its cuts back demand, and businesses reduce
their inventory.
For instance, in present scenario, India is struggling to lower its
inflation because high inflation has become hindrance in India
growth. On the other hand, developed economics like the USA and
JAPAN are struggling to increase inflation because their economy is
stagnating.
Lower inflation means lower aggregate demand in an economy. Due
to lower demand in these developed economies, they are not
witnessing growth. Hence, they are targeting for higher inflation.
Under normal circumstance, we can assume that a moderate
inflation is good for any economy. Since inflation simply means
demand >supply, which means overall consumption in an economy
is rising .rise in demand will cause increase in production. Because
of which profits of companies would earn ore profits, there will also
be hike in wages of workers as incentives. Hence, standard of living
of workers will improve, which ultimately means the economy is
processing.
However, extreme situation are detrimental for any economy.
Neither excessive inflation is good nor deflation (fall in prices) is
good. When there is excessive inflation, which means that goods are
getting very expensive, this will reduce aggregate demand for
products in the economy. This will cause fall in profits of companies
(or even losses). Because of which there might be reduction in
wages of workers or even layoffs, which will cause the economy to
shrink.
On the other hand, deflation has similar effect. Deflation looks good
fro consumers point of view. However, that isn’t so. There is
deflation in an economy where supply >Demand. Because of lack of
demand, companies will not produce goods, which will cause fall in
wages and ultimately reduction in aggregate demand. This again
causes shrinking of economy.
So, to conclude, every economy strives to achieve “moderate”
inflation. Inflation might be good or bad depending on economic
scenario of that country.