Inflation

Inflation is a continuous rise in the average level of prices of product in a country’s economy
over a period. When inflation happens, the purchasing power of money falls. People need more
money as they need before to maintain the same standard of living. Inflation refers, raising the
price of the overall economic level. If Inflation is higher, that time each unit of currency buys
fewer goods and services. When the inflation goes up to 25% in three months that is considered
hyperinflation.

There are two methods to measure inflation of a country, one is GDP deflator another one is
consumer price index (CPI) method. But the consumer price index (CPI) measures a list of the
products or goods and services that a person needs to live in a country in general. Whereas GDP
deflator measures all products or goods and services that a country produces.

Inflation Rate for the last 11 years of both countries (Bangladesh and Philippines): -

Years Inflation rate of the Inflation rate of the

Bangladesh Philippines
(Annual) (Annual)
2010 8.13% 3.79%
2011 11.4% 4.72%
2012 6.22% 3.03%
2013 7.53% 2.58%
2014 6.99% 3.60%
2015 6.19% 0.67%
2016 5.51% 1.25%
2017 5.70% 2.85%
2018 5.54% 5.21%
2019 5.59% 2.48%
2020 5.69% 2.64%
According to the graph, Bangladesh in 2012 inflation rate was lower compared to the previous
two years. The inflation rate was 6.22% in 2012. On the other hand, in 2013 the inflation rate
was 7.53% that was higher than 2012. Then in 2014 inflation rate started falling. In 2014- 2016
inflation rate fell constantly. In 2017 inflation rate slightly went up but from 2016-2020 it
followed a balanced inflation rate of 5%. Though that is a very high inflation rate for a country,
but there has some stability in the inflation rate. After 2018, inflation rate was again going
upwards though it was stabled at 5% inflation rate.

Comparisons between these Two Countries (Bangladesh & Philippines) Based

on Inflation Rate: -
Inflation Rate for the last 11 years, it clearly states that Bangladesh has a higher inflation rate
compared to the inflation rate of the Philippines. Though, inflation and deflation both are bad for
a country’s economy, but for many reasons the rate of price goods and services is changes. So,
the inflation rate of Bangladesh is inconstant from 2010 to 2020 at an increasing rate. And it has
the highest inflation rate in 2011 of 11.395%, which must have been bad for the economy, since
high inflation imposes various costs on society, and it has the lowest in 2016 with an inflation
rate of 5.514%.

Whereas, the Philippines has an average inflation rate, lower than Bangladesh’s inflation rate and
even their inflation rate is also inconstant from 2010 to 2020. However, the inflation rate of
2015-2016 is close to the deflation rate as well, which is beneficial for the consumers or the
economy as whole that impacts consumers positively because it increases purchasing power of
money to buy goods and services, as a result they can save money as they are earning more
relatively their day-to-day expenses. And the Philippines has its highest inflation rate in 2018
which is 5.21% and lowest in 2015 which is 0.67%. Whereas Bangladesh generally had an
inflation between (5 %–9 %) reaching its highest peak in 2011 with an inflation rate of 11.46%.
In the pandemic, the Philippine's inflation rate of 2020 was almost the same compared with
2019. As well as Bangladesh inflation rate had not been affected much by the pandemic, it
managed to remain at 5%.

But Bangladesh is a developing nation. People earn on a daily basis, people have no savings. For
pandemic people are not able to earn as much money they earned before the pandemic. Because
of the pandemic (COVID-19) many people lost their earning source. Moreover, because of our
security, the government announced a lock-down as a result many businessmen made losses.
People have no money to spend or buy any goods and services. On the other hand, rising prices
of goods and services creates difficulty for those people who have only one earning person in
their family. For the pandemic they face many financial problems. Although, the rising price of
daily products causes confusion about which prices of products are of good value. It leads to the
cost of consumers looking around different shops comparing prices.