Bangladesh sees inflation soar amid price spikes as official arithmetic put the rate at 9.33 per cent for March—the highest in seven months—worsening consumer woes.
High costs of some food items, especially protein items like chickens, eggs, and beef, spurred up the price indices, sources said.
The figures from the Office for Bangladesh’s National Statistical Organisation (NSO) showed inflation—as measured by the consumer-price index—having hit its highest level in August 2022 of this fiscal year, adding to the huge strain on households, especially those in lower-and limited-income brackets.
Economists and analysts say limited-income groups of people, like garment workers, day labourers, and others, suffer much as they have to pay through their nose with their earnings being eroded by the higher inflation.
However, the NSO or BBS (Bangladesh Bureau of Statistics) data showed that both food and non-food items were contributors to the rise in inflation in March.
The high-priced non-food items are medical and healthcare products, transport and clothing as well footwear products, while food items are poultry birds, beef, mutton and eggs.
On back of this rise, inflation measured by the BBS surpassed annual government target at 7.5 per cent (revised for FY 2023) for eight straight months, peaking to 9.33 per cent this past March.
And month-on-month inflation increased by 1.13 per cent in March over February.
Food inflation soared to 9.09 per cent while non-food inflation to 9.72 per cent.
The overall inflation based on the consumer-price index or CPI measured in Laspeyer’s formula was 8.78 in February, 8.57 in January, 8.71 in December, 8.85 per cent in November, 8.91 per cent in October, 9.1 per cent in September, 9.52 per cent in August, and 7.48 percent in July.
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, told the FE 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.
On the other hand, Dr Hussain said, Bangladesh Bank has been continuing its “expansionary attitude” in monetary policy as it introduced a number of refinancing schemes although the central bank claims that the refinancing schemes are to stabilise prices of the products, especially agricultural produce.
“To my mind, all factors remained in favour of rising inflation.”
Dr Monzur Hussain, director (Research) of the state-owned think-tank BIDS, told the FE that the monetary and fiscal mechanisms should be handled effectively to contain the inflationary pressures on the economy.
“Both fiscal and monetary policies should be tightened to combat soaring inflation.”
Chairman of Policy Exchange of Bangladesh Dr M. Masrur Reaz says the restrictions on letter of credit or LC have an impact on inflation as Bangladesh depends on some imported products to manufacture final goods.
Dr Masrur, who had earlier served the IFC (International Finance Corporation), said many raw materials’ supply to the market remained slow due to the import restrictions. Such items are used for manufacturing some food and non-food items.
“To my mind, the LC restriction is also contributing to the higher inflationary pressures on the economy.”
jasimharoon@yahoo.com