Although Finance Minister AHM Mustafa Kamal has considered inflation control as one of the big challenges, he wants to keep already-runaway price increases within a 6.0-per-cent limit in the next fiscal year with no brand-new strategy.
"The adjustment of fuel prices in the domestic market and government initiatives to keep the food and supply systems normal, the inflation will remain much controlled in the next fiscal year and the annual average inflation is expected to stand at around 6.0 per cent," Mr Kamal said while presenting the national budget before the parliament on Thursday.
Overall, our current challenge is to control inflation, improve the current account balance situation and stabilise the foreign exchange rate, the finance minister noted.
However, he has not announced any fresh policies or strategies for taming the inflationary pressure on the people. Rather, the minister elaborated on the government's initiatives and policies over the years for tackling inflation.
Bangladesh's 12-month average inflation has already swelled to 8.64 per cent between May 2022 and April 2023, according to the Bangladesh Bureau of Statistics (BBS) data.
The point-to-point inflation rate surged to 9.24 per cent in April compared to the same period last FY2023, show the BBS data.
Meanwhile, the finance minister has blamed the global scenario for the country's current inflationary pressure, saying, "These changes in the global environment are also affecting our economy. It is noteworthy that inflation in Bangladesh was limited to 5.0 to 6.0 per cent in the pre-war decade."
He added that the increase in import costs due to post-war global inflation and the depreciation of the country's foreign exchange rate led to a surge of average inflation to 9.5 per cent in August 2022.
As a result, it will not be possible to keep the annual average inflation within 5.6 per cent as per the target in the current financial year, Mr Kamal said in his budget speech.
"The Russia-Ukraine war situation has had the biggest impact on inflation, government spending, balance of payments, foreign exchange reserves and exchange rates."
We are expanding the targeted social protection programmes and distributing food at a minimum price or free of cost to the low-income segment of the population to mitigate the impact of import-induced inflation, Mr Kamal said.
"In addition, we are considering, on a priority basis, housing and job creation for the homeless rural development programmes to reduce poverty, and building an egalitarian society. Above all, we are also giving priority to addressing climate change impacts to ensure long-term sustainable development."
Although inflation increased due to the Russia-Ukraine war, the government has been making an all-out effort to check inflation and mitigate its impact on the people, the finance minister said.
Mr Kamal said the government's measures include austerity, continuing priority spending on projects related to public welfare and supply sectors, keeping agricultural production uninterrupted, taking quick and effective steps to ensure affordable prices for fertilizers and allocating subsidies for electricity and gas.
To control inflation and mitigate its impact on low-income people, the government has been carrying out schemes like the food-friendly programme, open market sale of rice, distribution of 10 million family cards and so on.
Quoting the International Monetary Fund (IMF), the minister said the recovery process in the global context, especially in countries important for our trade and remittances, has begun and will continue.
"At the same time, the IMF's projection also revealed that global inflation will moderate as food, fertilizer and fuel prices in the international market are returning to normal."
To address the recent import-related inflationary pressures and their impact on the impoverished and low-income segments of society, we have implemented the Food Security Programme, he said.
Recently, the central bank has undertaken some reform initiatives in the monetary sector to control import-induced inflation caused by the impact of the Russia-Ukraine war, address decreasing foreign exchange reserves and stabilise the exchange rate, the minister said in his budget speech.
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