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    Topic: Give A Description About Inflation in BD. Do You Think That, Inflation Is Better For The Economy?

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    Afrina Afsar
    Inflation in Bangladesh has been declining over the last eight months, dropping to 5.57% in May 2021. Most countries aim for an inflation rate of 2-3% per year, as this is low enough to avoid problems for businesses and households but high enough to prevent deflation. While Bangladesh's inflation rate is comparatively high and moves with food prices, the government has taken steps to control prices and reduce inflation. Moderate inflation of around 2-3% is generally good for economies as it encourages consumption today rather than delaying purchases. Both very high inflation and deflation are detrimental as they can reduce demand, lower profits, cut wages and wages, and ultimately shrink the economy. Whether low or high inflation is

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    Topic: Give A Description About Inflation in BD. Do You Think That, Inflation Is Better For The Economy?

    Uploaded by

    Afrina Afsar
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    Inflation in Bangladesh has been declining over the last eight months, dropping to 5.57% in May 2021. Most countries aim for an inflation rate of 2-3% per year, as this is low enough to avoid problems for businesses and households but high enough to prevent deflation. While Bangladesh's inflation rate is comparatively high and moves with food prices, the government has taken steps to control prices and reduce inflation. Moderate inflation of around 2-3% is generally good for economies as it encourages consumption today rather than delaying purchases. Both very high inflation and deflation are detrimental as they can reduce demand, lower profits, cut wages and wages, and ultimately shrink the economy. Whether low or high inflation is

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    Inflation

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    Inflation in Bangladesh has been declining over the last eight months, dropping to 5.57% in May 2021. Most countries aim for an inflation rate of 2-3% per year, as this is low enough to avoid problems for businesses and households but high enough to prevent deflation. While Bangladesh's inflation rate is comparatively high and moves with food prices, the government has taken steps to control prices and reduce inflation. Moderate inflation of around 2-3% is generally good for economies as it encourages consumption today rather than delaying purchases. Both very high inflation and deflation are detrimental as they can reduce demand, lower profits, cut wages and wages, and ultimately shrink the economy. Whether low or high inflation is

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    26 views4 pages

    Topic: Give A Description About Inflation in BD. Do You Think That, Inflation Is Better For The Economy?

    Uploaded by

    Afrina Afsar
    Inflation in Bangladesh has been declining over the last eight months, dropping to 5.57% in May 2021. Most countries aim for an inflation rate of 2-3% per year, as this is low enough to avoid problems for businesses and households but high enough to prevent deflation. While Bangladesh's inflation rate is comparatively high and moves with food prices, the government has taken steps to control prices and reduce inflation. Moderate inflation of around 2-3% is generally good for economies as it encourages consumption today rather than delaying purchases. Both very high inflation and deflation are detrimental as they can reduce demand, lower profits, cut wages and wages, and ultimately shrink the economy. Whether low or high inflation is

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 4

    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.

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