Modelling and Forecasting the Consumer Price Index in Bangladesh through Econometric Models
Keywords:
Forecasting, CPI, Inflation rate, Box-Jenkins method, ARIMA modelsAbstract
Persistent economic growth along with high Consumer Price Index (CPI) and low inflation is the major aim of the economic theory. This paper uses annual time series data on CPI from the period 1986 to 2018 and find the best econometric time series model for forecasting the CPI in Bangladesh. In this study different Autoregressive integrated moving average (ARIMA) model are used. To find the best ARIMA model we have used here Akaike information criteria (AIC), corrected Akaike information criteria (AICc) and Bayesian information criteria (BIC). This study presents ARIMA (2, 2, 0) model to forecast the CPI in Bangladesh based on the lowest values of AIC, AICc and BIC than other ARIMA models. Based on the selected ARIMA (2, 2, 0) model we forecast the CPI in Bangladesh from period 2019 to 2025. The results of the study show that the CPI in Bangladesh is to continue an upward trend with respect to time.
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