This paper made an attempt to explain, among other things, the dynamics ofrninflationary process and, hence, give insights as to how to manage therninflationary process in the country. To investigate this issue we employ both rnstatistical as well as econometric methods. To look at the specific determinantsrnof inflation we model the country's inflation process from the monetarist as wellrnas the structuralist view. Moreover, to capture the relative sectoral differencesrnin response to changes in some of the important macroeconomic variables, wernclassify the economy into the agricultural and non agricultural sectors and modelrnthe respective sectors accordingly.rnBased on this procedures we found out that inflation in the country is generallyrna supply rather than a demand side phenomenon. In addition to this, we noticernthat the monetarist argument that inflation has a one- to c one correspondence tornchanges in broad money supply does not hold in our case. What we notice is thatrneven under steady state equilibrium situation, the impact of broad money supplyrnon the inflationary process in the country is very minimal. We proceed and applyrnthe structuralist model and found out that the lion's share of the variation in therninflationary process in the country is explained by this model. Here, we found outrnthat, on top of the monetarist variables, especially income, the variation inrninflation is influenced by structural as well as institutional factors. Specifically,rnwe observe that the long run inflationary process is found to be determined byrnreal income, import prices and government deficit level. In the short run, on thernother hand, in addition to the above variations in broad money supply and rainrnfall play an important role in the inflationary process of the country. in line withrnthe structuralists' argument we also found out that there are, indeed, sectoralrndifferences in response to changes in some of the macro economic variables.