INFLATION

Inflation occurs due to an imbalance between demand and supply of money, changes in production and distribution cost or increase in taxes on products. When the price level of goods and services rises, the value of currency reduces. This means now each unit of currency buys fewer goods and services.

  In a market economy price for goods and services can always  change. Some prices  rise, some price fall. Inflation occurs when there is a board increase in the price of goods and services not just of individual items,we can buy less for 1 taka today  than we could yesterday. Long lasting episodes of high inflection are open the result of lux monitary policy. If the money supply gross too big relative to the size of an economy,the unit value of the currency diminishes, in the other word its purchasing power falls and prices rise.Inflection as measured by the consumer price index reflects the annual percentage change in the cost to the average customer of acquiring a basket of goods and service that may be fixed.

It has its worst impact on consumers. High prices of day-to-day goods make it difficult for consumers to afford even the basic commodities in life.

Hence the government as well as the central bank always strive to achieve a limited level of inflation.