Inflation and household welfare: Evidence from Bangladesh

Abstract

Inflation in Bangladesh is historically dominated by food inflation. Since food consumption constitutes a major part of the consumption basket of the people, inflation might have detrimental effect on household welfare. This chapter assesses the impact of inflation on different household groups such as day laborers and fixed-salaried households as well as other income groups. For this purpose, group-specific consumer price indexes (CPIs) have been estimated for different groups of households, using respective weights attached to their consumption baskets. Some stylized facts have emerged from the analysis. Relatively poorer households face higher inflation than non-poorer households and day laborers, and fixed income household groups face higher food inflation than non-food inflation.