The document discusses inflation trends in Bangladesh from 2012-2017. Some key points: - Inflation in Bangladesh averaged 6.60% from 1994-2017, with a high of 10.21% in September 2011 and low of -0.03% in December 1996. - In September 2017, Bangladesh's inflation rate was 5.45%. Food inflation has generally been higher than non-food inflation. - Inflation reduces purchasing power and national savings, while also raising import prices and discouraging investment. Both demand-pull and cost-push factors can cause inflation. - Monetary and fiscal policies can help control inflation in the short-run, while supply reforms and workforce changes aid

2. PRESENTED BY
AKIB AL ADIB PRANTO
B 150203016

3. INFLATION. . .
A TERM USED IN ECONOMICS
WHEN A RISE IN THE GENERAL LEVEL OF
GOODS AND SERVICES IN AN ECONOMY OVER
A PERIOD OF TIME IS KNOWN AS INFLATION.
IF GENERAL PRICE LEVEL RISES, EACH UNIT OF
CURRENCY BUYS FEWER GOODS AND SERVICES.

4. An Upward trend in Inflation over last couple of years,
Reduces the net consumption of the poor.
INFLATION IN BANGLADESH

5. Source: Bangladesh Bureau of Statistics (BBS)
8.69
6.78
7.35
6.41
5.84
5.45
7.72
5.22
8.57
6.68
4.91
6.95
10.21
9.17
5.54
5.99
7.47
4.61
2012 2013 2014 2015 2016 2017
General Inflation Food Inflation Non-food Inflation
1. The inflation rate in Bangladesh was recorded at
5.45 percent in September 2017.
2. Inflation rate in Bangladesh averaged 6.60 percent
From 1994 to 2017.
3. Highest inflation rate recorded in September of
2011 and a lowest recorded of -0.03 percent in
December of 1996.
INFLATION RATE IN BANGLADESH

6. INFLATION RATE & ECONOMIC GROWTH
 Decrease in the purchasing power
 Redistribution of Income & Wealth
 Lowers National Savings
 Rising Price of Imports
 Discourage Investment and Savings
 Unemployment

7. PRESENTED BY
MD. SHAKAWAT HOSSAIN
B 150203032

8. CAUSES OF INFLATION
1.Demand Pull Inflation
National output
Pricelevel
p
P1
AD>AS

9. Why Demand Pull Inflation Occurs?
I. Depreciation of exchange rate
II. Higher demand from a fiscal stimulus
III.Monetary stimulus to the economy
IV.Marketing and new technology

10. 2.Cost Push Inflation
National Output
PriceLevel
p
P1

11. Why Cost Push Inflation Occurs?
I. Components cost
II. Rising labor cost
III. Monetary employments

12. PRESENTED BY
MD. MAHABUB MIAH
B 150203019

13. • Trend in inflation: General inflation increased from 5.47% in April
2017 to 5.94% in June 2017.The twelve month average consumer
price index has assumed upward trend in recent time as well as
previously CPI inflation has been steadily coming down to 5.03% in
December 2016.
IMPACT OF INFLATION

14. IMPACT OF INFLATION
Inflation has both positive and negative impact on the economy. The economic impact of inflation
are:
1. Impact on income and wealth distribution: Inflation affects the distribution of income and
wealth because of difference in the assets and liabilities that people hold. Inflation increase
income who owe money and decrease income who lend money.
2. Impact on economic efficiency: Inflation impairs economic efficiency because it distorts
prices and price signals. It also distort the use of money. If the inflation rate rise from 0 to
10%;the real interest rate on currency fall from 0 to 10%.it also increase the real value of
taxed paid even though real income have not changed.

15. Impact of inflation on manufacturing industry: more than 80% of the companies in
both the manufacturing and non manufacturing industries have replied that
advancing inflation reduce profit. Growth rate of revenue
IMPACT OF INFLATION

16. Growth and inflation: Numerous studies state that inflation has
negative effect on output growth..
1. A nonlinear relationship between inflation and economic growth
has been found in the study of sarel (1996); ghosh and
Phillips(1998).They found a effect of inflation on economic growth.
2. Joao Ricardo Faria and Francisco(2001) analyzed the data for brazil
and found that inflation does not impact growth in the long run but
in the short run there exists a negative effect.
IMPACT OF INFLATION

17. • Private sector credit growth: private sector credit growth slightly
increased from 16.1% in march 2017 to 16.2% in April then decline to
16% may 2017.Taking account of the recent trend, it is cautioned that
the target of 16.3% growth in private sector credit for first half of the
current fiscal year may remain unachieved.
IMPACT OF INFLATION

18. PRESENTED BY
MD. SOHEL AHMED
B 150203047

19. PHILLIPS CURVE
RELATIONSHIP BETWEEN INFLATION AND UNEMPLOYMENT

20. INFLATION AND UNEMPLOYMENT RATE IN BANGLADESH
8.69%
6.78%
7.35%
6.41%
5.84%
4.48%
4.26% 4.24% 4.12% 4.07%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
2012 2013 2014 2015 2016
Inflation Unemployment

21. RELATIONSHIP BETWEEN INFLATION AND GDP
GDP is negatively related with inflation
When inflation increases cost of
production increases
Increasing cost of production fall
profits of organization, which reduces
Growth Domestic product (GDP)

22. INFLATION AND GDP RATE IN BANGLADESH
8.69%
6.78%
7.35%
6.41%
5.84%
6.52%
6.01% 6.06%
6.55%
7.05%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
2012 2013 2014 2015 2016
Inflation GDP

23. RELATIONSHIP BETWEEN INFLATION AND REMITTANCE
Inflation and Remittance are positively
related
When remittance increased, inflation
also increased
Food inflation in more affected by
remittance
House and constitution is less affected
by remittance

24. INFLATION AND REMITTANCE RATE IN BANGLADESH
8.69
6.78
7.35
6.41
5.84
14.16 13.83
14.94 15.32
13.16
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
2012 2013 2014 2015 2016
Inflation Remittance (in Billion)

25. PRESENTED BY
BISWAJIT DEBNATH
B 150203082

26. POSITIVE EFFECT OF INFLATION IN BANGLADESH
1. Labor market adjustment
2. Room to maneuver
3. Mundell-Tobin effect
4. Instability with Deflation
5. Financial Market Inefficiency with Deflation

27. Labor Market Adjustment
Keynesians believe that nominal wages are
slow to adjust downwards. This can lead to
prolonged disequilibrium and high
unemployment in the labor market. Since
inflation would lower the real wage if
nominal wages are kept constant,
Keynesians argue that some inflation is good
for the economy, as it would allow labor
markets to reach equilibrium faster.

28. Room to Maneuver
The primary tools for controlling the money supply are the ability to set the
discount rate, the rate at which banks can borrow from the central bank, and
open market operations, which are the central bank’s interventions into the
bonds market with the aim of affecting the nominal interest rate.
If an economy finds itself in a recession with already low, or even zero, nominal
interest rates, then the bank cannot cut these rates further in order to stimulate
the economy – this situation is known as a liquidity trap.
A moderate level of inflation tends to ensure that nominal interest rates stay
sufficiently above zero so that if the need arises the bank can cut the nominal
interest rate.

29. Mundell-Tobin Effect
The Nobel laureate Robert Mundell noted that:
 Moderate inflation would induce savers to substitute lending for some money holding as a means to
finance future spending.
 That substitution would cause market clearing real interest rates to fall.
 The lower real rate of interest would induce more borrowing to finance investment.
The Nobel laureate James Tobin noted that:
 Such inflation would cause businesses to substitute investment in physical capital for money balances in
their asset portfolios.
 That substations would mean choosing the making of investment with lower rates of real return.
 The rates of return are lower because the investments with higher rates of return were already being
made before.
The two related effects are known as the Mundell-Tobin effect. Unless the economy in already overinvesting
according to models of economics growth theory, that extra investment resulting from the effect would be seen
as positive.

30. Instability with Deflation
Continually falling prices and the resulting incentive to hoard money will cause
instability resulting from the likely increasing fear, while money hoards grow in value of
those hoards are at risk, as people realize that a movement to trade those money
hoards for real goods and assets will quickly drive those prices up.
Any movement to spend those hoards “Once started would become a tremendous
avalanche, which could rampage for a long time before it would spend itself.
Thus, a regime of long-term deflation is likely to be interrupted by periodic spikes of
rapid inflation and consequent real economic disruptions.
Moderate and stable inflation would avoid such a seesawing of price movements.

31. Financial Market Inefficiency with Deflation
 When savers have substituted money holding for lending on financial markets, the role of
those markets in channeling savings into investment in undermined.
 With nominal interest rates driven to zero, or near to zero, from the competition with a high
return money asset, there would be no price mechanism in whatever is left of those markets.
 With financial markets effectively euthanized, the remaining goods and physical asset prices
would move in perverse directions.
 For example, an increased desire to save could not push interest rates further down but
would instead cause additional money hoarding, driving consumer prices further down and
making investment in consumer goods production thereby less attractive.
 Moderate inflation, once its expectation is incorporated into nominal interest rates, would
give those interest rates room to go both up and down in response to shifting investment
opportunities, or severs’ preferences, and thus allow financial markets to function in a more
normal fashion.

32. PRESENTED BY
MD. EHSANUL HAQUE
B 150203072

33. Short term mechanism Long term mechanism
Monetary policy Fiscal measure Supply reforms Work force reformation

34. SHORT TERM MECHANISM
Monetary policy:
Bank rate policy
CRR
SLR
Open market operation
Fiscal measure:
Changing in Taxes
Savings
Surplus budget

35. LONG TERM MECHANISM
Supply Reformation:
Minimizing input cost
More output at lower cost
Work Force Reformation:
Introduce part-time and temporary work force.
It decreases the labor cost.
Reduce cost push inflation.

36. There are many factors behind the rising trend of inflation in
Bangladesh. Such factors contribute, in their own way, to the price-
hike of essential items. A detailed analysis of the situation is, thus,
called for, in order to help devise a strategy for combating inflation
effectively. From the various monetary, fiscal and other measures
discussed above, it becomes clear that to control inflation, the
government should adopt effective measures appropriately.
CONCLUTION

37. References
https://en.wikipedia.org/wiki/Inflation
https://www.bb.org.bd/econdata/inflation.php
https://www.slideshare.net/hefazot2013/inflation-and-its-effect-
on-bangladesh
https://www.brecorder.com/2017/07/11/358605/bangladesh-
inflation-cools-in-fy-201617-food-inflation-climbs/
https://tradingeconomics.com/bangladesh/inflation-rate-mom
https://www.academia.edu/721976/A_case_study_of_Bangladesh
-_Inflation_Unemployment_Growth_Trend