Bangladeshis pass hard times in the outgoing year 2024 as inflation defiantly stays in double-digit rhythm pushed by high prices that created consumer pain, analysts say.
Fiscal interventions by the government in the form duty-tax waivers were almost defied by the wayward market that many say stayed in grips of some business oligopolies.
The commoners, especially middle-and low-income groups, faced hardship in their daily living as they have been forced to spend most of their incomes on food and other essentials coming from manufacturers.
As such, many had to take recourse to intraflation: they cut their housing, health, child-education and recreational expenses.
This belt-tightening was adopted to deflect huge inflationary pressure over the entire year, people from low-to middle-class society told the FE.
Meanwhile, the government efforts to tame the double-digit inflation in the passing year have almost gone haywire, although it also took a wary public spending approach and a bounded money-flow system in the market.
The inflation rate in the year was the highest in 13 years, as the deposed Sheikh Hasina government and this interim administration could do little to cool the overheated consumer price index (CPI) over the last couple of years, analysts say.
Over the last one year between December 2023 and November 2024, the rate of 12-month average inflation was recorded at 10.22 per cent-the steepest in a decade-as shown in Bangladesh Bureau of Statistics (BBS) data.
In the last year of 2023, the average inflation rate was officially recorded at 9.9 per cent.
The last double-digit inflation was recorded in the calendar year 2011 when it climbed to 11.40 per cent, the BBS data showed.
Although the inflationary pressure eased in 2012 and had maintained a better curve between 2012 and 2021, it started to climb high in 2022, when the average rate was recorded at 7.7 per cent. It jumped to 9.9 per cent in 2023.
Meanwhile, between 2013 and 2021, the 12-month average inflation rate was hovering around 5.5 per cent to 7.5 per cent, as per the BBS data.
Economist Dr Masrur Reaz told the FE Monday that government's cautious approach in monetary policy and public spending was late against the higher inflationary pressure two years back.
Although the Bangladesh Bank (BB) inflated the policy rate 11 times in last one and a half years and withdrew the pegged 9.0-6.0-percent cap on interest in May 2023, those measures were already mistimed.
"The huge insertion of high-powered money by the ousted Sheikh Hasina government was another big factor for the inflation hike," says Dr Masrur, Chairman of the Policy Exchange, Bangladesh.
The young economist notes that the supply shortages of different essential items also inflated the inflation.
"The last government imposed massive restrictions on import. Although this interim government has relaxed the import restrictions to some extent, but it is still not open, which also has an impact on the supply chain," he believes.
He identifies market manipulation through several players on the supply-chain systems as another reason for higher CPI counts.
The economist suggests that the government should limit the tires (brokers/traders) on the supply chain, formalise the trading system and empower the Bangladesh Competition Commission (BCC) to tame the inflation by way of trade and business diversification.
Simultaneously, other monetary and fiscal measures should also be applied properly for reducing the inflation.
A senior BB official says they had already increased the policy rate several times over the years, taken contractionary monetary policy and withdrawn high-powered money and relaxed the import aiming to keep the inflation under control.
A senior Ministry of Finance (MoF) official says the government has already taken austerity measures in public spending in a bid to tame the inflation.
"We hope that the inflation will be coming down from this month, December, as the supplies of different essential items, including vegetables, eggs, pulses, rice and fish, are rising in the market. Their prices are also going down gradually," he adds. In the macroeconomic policy statement, the Bangladesh government has set a target to keep the inflation at 6.5 per cent in the current fiscal year (FY) 2024-25.
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