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বাংলা
Dhaka Tribune

Strategies for stability

Addressing the challenge of inflation in Bangladesh

Update : 25 Mar 2024, 04:23 PM

Inflation is a measure of the general increase in prices of goods and services over time. When inflation goes high, the purchasing power of people's income decreases. This can lead to financial pressure and a lower standard of living for individuals and families. 

Because of rapidly growing inflation, the price of goods and services skyrocketed in Bangladesh. Whereas the income level of people did not grow accordingly. As a result, most of the people of the country are getting less or more affected by inflation. Nowadays people with low income find it difficult to survive as they cannot meet the living cost with their current income. 

Bangladesh has one of the fastest-growing economies in the world. At present, Inflation has become a major drawback for our economy. Inflation in Bangladesh has been rising significantly over time. As per information from the Bangladesh Bureau of Statistics, the inflation rate is 9.67% as of February 2024 and the monthly average inflation (12 months) is 9.66% up to February 2024. To ensure sustainable economic growth keeping the inflation rate in check is a must. Here are some propositions that may be followed to keep inflation in check:

The Bangladesh Bank can tighten the monetary policy by increasing the interest rates. It would reduce the money supply in the economy and subsequently decrease the inflation rate. Along with that, the government can use fiscal policy tools, such as government spending and adjusting tax rates to manage inflation. For example, by reducing government spending, the government can reduce the overall demand in the economy, which can help lower inflation.

Developing agricultural productivity can lower food prices and reduce inflation

The government can implement price controls on certain goods and services to prevent prices from rising too rapidly. This can help limit the impact of inflation on the cost of living. The government can also implement it to limit the rise in salary and wages, which can contribute to higher inflation.

The government can manage the exchange rate to control the prices of imported goods, which can influence price levels in the economy. Moreover, the government can implement policies to increase the production of goods and services, which can help reduce inflationary pressures.

Developing agricultural productivity can lower food prices and reduce inflation. On the other hand, improved transportation can help reduce supply chain hindrances and lower prices. The growth of small and medium enterprises (SMEs) can also increase competition. It leads to lower prices and reduced inflation.

Hopefully, Bangladesh can get a positive outcome from controlled inflation by following the measures mentioned above. However, while these measures are helpful to reduce inflation, it's important to maintain a balance. Excessive control may lead to negative impacts on economic growth and development. Overall, a coordinated and cautious approach is required to keep inflation under control. 

Sanjay Bhattacharjee is a Senior Officer at BASIC Bank Limited.

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