Bangladesh saw overall inflation resurge again in February to 8.78 per cent after a restraint for two consecutive months of December and January, official statistics show, as price spikes incense the indices.
This spike in inflation, counted on a point-to-point basis, is primarily driven by an increase in prices of both food and non-food items, like power, LPG gas, poultry, and beef, according to data released Sunday by the Bangladesh Bureau of Statistics (BBS).
The core inflation - non-food, non-fuel component - also remained sticky at 9.82 per cent in February last.
Prime Minister Sheikh Hasina took a strong note of the wayward market behaviour. While inaugurating Bangladesh Business Summit-2023 Saturday, she cautioned the country's business leaders that they would lose market unless they can keep the commodity prices normal and end the sufferings of the commoners.
"Considering the sufferings of the common people, the business leaders will have to find out ways to bring the prices of essential commodities to a normal level. You will have to take steps accordingly. Otherwise, you will lose your own markets," she said on a note of caution.
Economists say such increases in terms of food inflation are due to rises in the prices of some goods which are usually consumed during the month of Holy Ramadan.
They also argued that the power-price hike - thrice in a row -is actually up by nearly 16 per cent as it was made on a compound basis.
The overall inflation based on the consumer-price index (CPI) measured by Laspeyer's formula had eased in December and January. In December it was 8.71 and in January 8.57 per cent respectively.
The BBS, which computes the CPI and then inflation, uses its urban consumer basket for a total of 422 commodities - food and nonfood. It includes a rural basket consisting of 318 food and non-food items.
Dr Zahid Hussain, a former lead economist of the World Bank, Dhaka office, noted that the retail prices of some key commodities increased before the holy month of Ramadan.
He named beef, poultry, eggs, sugar, edible oils, and all types of vegetables as commodities having record highs on the price indices.
Dr Hussain made a mention of monetary policy's impact on the market situation. He said the central bank has been continuing its "expansionary attitude" in monetary policy as it introduced a number of refinancing schemes.
"All factors remained in favour of rising inflation on the economy. Why inflation will not increase?" The former World Bank economist posed the question as regards money supply in the economy.
Dr Monzur Hussain, Director (Research) at the state-owned think-tank BIDS, suggests that the monetary and fiscal mechanisms should be handled effectively to contain the inflationary pressures on the economy.
"To my mind, both fiscal and monetary policies should be tight to combat the soaring inflation," Dr Monzur told the FE as a remedy. He said the global market prices of some commodities are also a key reason for domestic price rises.
Dr M. Masrur Reaz, chairman of the Policy Exchange of Bangladesh, thinks the restrictions on letter of credit or LCS for import under a belt-tightening measure for the crisis time cast a domino impact on inflation, as Bangladesh depends on some imported products.
Dr Masrur said many raw materials' supply to the market remained slow due to the restrictions on imports. "Such items are used for manufacturing some food and non-food items," he added.
"To my mind, the LC restriction is also contributing to the higher inflationary pressures on the economy."
Naming one of the high-priced items, Dr Masrur said cement prices remained up as producers use limestone and clinkers for manufacturing the key construction material.
"So I think there are some negative aspects of restricting imports on the inflation." However, the rural food inflation rose little slower at 8.19 per cent and non-food to 9.98 per cent
Urban food inflation spiked to 7.98 per cent and non-food at 9.61 per cent.
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