Inflation in South Asia: Trend and macro economic linkages Patra Sudhakar Associate Professor of Economics, Post Graduate Department of Economics, Ravenshaw University, Cuttack, Orissa, India. E-mail: sudhakarpatra65@gmail.com Online published on 20 June, 2017. Abstract The objective of this paper is to analyze the consumer price inflation in South Asian countries from 1976 to 2008. The annual percentage change in CPI and average annual growth rate in Consumer Price Indices are analyzed to examine the trend of inflation in South Asian countries like Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. India has average inflation of 5%, but Sri Lanka is the hardest hit by inflation among South 4sian countries. Bhutan has very low rate of inflation and Maldives has rising trend of inflation. The inflation rates are co-related with the growth rate of gross domestic product and money supply of South Asian countries. The macro economic relationships are analyzed in the paper. The mean, standard deviation, co-eficient of variation and co-eficient of correlation of inflation in 5 selected South Asian countries are focussed. There is positive correlation between the rate of inflation and rate of change in GDP at constant prices in Bangladesh, India, Pakistan and Sri Lanka, but negative correlation in Nepal. There is negative correlation between rate of inflation and changes in money supply in Bangladesh, Nepal and Pakistan, but positive correlation in Nepal and Sri Lanka. In Pakistan, the consumer price inflation is mainly due to oil price hike and food inflation. The inflation scenario in South Asia is adverse to economic development because it is above 5% in most of the countries. Top |