Our economy works best when there is price stability. That means we need to guard against an inflation rate – the rate at which the overall prices for goods and services change over time – that is either too low or too high. Price increases should be small enough not to create the problems that come with high inflation for people and businesses. But they should be large enough to avoid bad scenarios that may unfold if inflation falls too low. When inflation is low, stable and predictable, it helps people and businesses to better plan their savings, spending, and investment. That helps the economy to grow, in turn creating jobs and prosperity.

1. IMPACT OF PRICE LEVEL STABILITY IN
GROWTH AND DEVELOPMENT OF A
COUNTRY
Prepared and Presented by
Mohammad Rahmatullah 182006031
Farjana Akter Rima 182006028
Farha Naznin 163006010
Maliha Jahan 173006046

2. CONTENT
• Introduction to inflation
• Inflation in the economy of Bangladesh
• Inflation in Food and Non-Food Items
• Importance of Inflation for Development
• Price level of Bangladesh
• Suggestion for making price level stable

3. INTRODUCTION TO INFLATION
• Inflation is the decline of purchasing power
• rise in the prices of most goods and services
• 4 main factors leading to inflation in an economy
• Conceive both negative and positive impact in economy
• excessive inflation or deflation both harm a country’s economy
• Venezuela faces incredible inflation 200,000%, then Zimbabwe, Argentina,
Iran
Mohammad Rahmatullah

4. INFLATION IN THE ECONOMY OF BANGLADESH
• Inflation is common phenomenon in our country
• Experienced highest inflation in 1975, 80.57%
• The next year embraced highest deflation, -17.63%
• From 1971 to 1997, inflation was at alarming level
• After 1997 it wasn’t more than 8.2 %
• In the period pandemic the inflation was 5% to 6%
Mohammad Rahmatullah

5. INFLATION IN FOOD ITEMS
• Food for all the citizens is a basic right asserted by the National Constitution of
Bangladesh.
• The rise of food price has a severe impact over the marginalized people. This
rising inflation has become an alarming threat to the poor and middle-class
people from all segments of the society.
• According to the World Bank, about four million people of Bangladesh have been
pushed below the poverty line due to abnormal rise in food prices.
Farha Naznin

6. INFLATION IN FOOD ITEM IN BANGLADESH:
• The corresponding real prices also have risen by 53% and 24%, with a substantial
rate of increase in rice prices according to Bangladesh Economic Update, 2011
• Persistent high inflation may unleash forces that jeopardize macroeconomic
stability and economic growth.
• It can happen because of decrease in the production of food and increase in the
demand of food.
Farha Naznin

7. INFLATION IN NON-FOOD ITEM IN BANGLADESH:
• Not only the food item but also the inflation in non-food items of Bangladesh is
increasing day by day.
• The inflation rate of last 12 months is enough to understand the nature of inflation rate in
non-food items.
Aug
2020
Sep
2020
Oct
2020
Nov
2020
Dec
2020
Jan
2021
Feb
2021
Mar
2021
Apr
2021
May
2021
Jun
2021
Jul
202
2.49
%
2.52
%
2.52
%
2.53
%
2.53
%
2.56
%
2.58
%
2.59
%
2.60
%
2.61
%
2.62
%
2.63
%
Farha Naznin

8. WHY INFLATION IS IMPORTANT FOR
DEVELOPMENT
 For developing countries, the inflation rate should be at 3% to 4% and
for developed countries, the acceptable inflation rate is 1% to 2%
 Increase in production due to inflation
 Increases the employment opportunities in the country
 Enhances the process of economic development
 Increases the economic activities that may causes to inventions and
innovations
 It helps boost consumer demand and consumption, driving economic
growth
Farha Naznin

9. PRICE LEVEL OF BANGLADESH
• Price is the amount that a customer wants to pay for a product or service
• when there is no or little change in price is price stability
• It has some significant benefits
 Improves price transparency
 Avoids arbitrary redistribution of wealth
 Lower risk premia
 Reduce inflation or deflation
Farjana Akter Rima

10. PRICE LEVEL OF BANGLADESH
• Incompatible behavior in prices of individual commodities
• Factors of price instability
 Weather and natural diesters
 Create differences between demand and supply
 Transportation and storage
 Unrest political situation
 Indicators of the economy
 Seasonal pattern
Farjana Akter Rima

11. PRICE LEVEL OF BANGLADESH
• Impacts of price instability
 Lower purchasing power
 Less savings
 Less investment
 Increases in unemployment
 Low national income
 Depression
Farjana Akter Rima

12. PRICE LEVEL IN BANGLADESH
• Unstable price level is a common affair in Bangladesh
• Reasons of instable price;
 Impact of pandemic situation
 Depending on import
 Impact of international market price
 Market Syndicates
 Corruption
 Unrest political situation
 Inflation
Farjana Akter Rima

13. SUGGESTION FOR MAKING PRICE LEVEL STABLE
• Fiscal Policy
• The government’s tool to ensure stable prices is fiscal policies,
which involve adjusting tax rates or government spending.
• Fiscal policies work well to combat both inflation and deflation
because the government can use taxes and spending to either
increase or decrease the amount of money their citizens have access
to, either increasing or decreasing the value of the money itself .
Maliha Jahan

14. SUGGESTION FOR MAKING PRICE LEVEL STABLE
• Monetary policy - While monetary policy works well to combat
inflation, it isn’t effective against deflation, because loans taken out
during deflation have to be paid back with currency worth more
than it was when the loan was taken out. This is why a slow and
steady inflation rate is best for an economy—it keeps the nominal
interest rate above zero and allows banks to contribute to price
stability
Maliha Jahan

15. Thanks for being with
us