Inflation "will not rise significantly" on the increase in fuel prices, as the raise is modest compared to global situation, says the commerce minister facing question in parliament.
Minister Khandaker Abdul Muktadir presents explanation in support of his claim, stating that "it is important to understand why inflation will not increase in that way".
"First of all, it is important to understand why inflation will not increase significantly. Compared to the ratio at which global fuel prices have increased, the rise in Bangladesh has been quite modest."
In the United States, he mentions, fuel prices vary from state to state due to their own tax systems. Before this war began, prices in many states were around $2.70-$2.80 per gallon (about 4.5 litres), which have now exceeded $5 in various states.
"If you compare with neighbouring countries or economies similar to Bangladesh, you will see fuel prices have increased significantly everywhere. In many countries, fuel-price adjustments are automated -- meaning they are triggered automatically without requiring separate government intervention," the minister told the House.
He made the explanation in response to a supplementary question from independent Member of Parliament Rumin Farhana during the question-and-answer session in the National Parliament on Monday. The session was presided over by Deputy Speaker Kaiser Kamal.
Regarding the domestic fuel-price hike, he said: "In our case, diesel has increased from Tk 100 to Tk 115 -- an increase of 15 percent. To explain, in an industrial factory, fuel typically accounts for 7-8 per cent of the cost of production, depending on the manufacturing sector. If we consider that 7-8 per cent as 100 per cent, then a 15-percent increase has occurred within that component."
Explaining the impact on transportation with arithmetic, he said, "If you consider transportation, a bus running 200 kilometres uses roughly 25-30 litres of diesel. For 30 litres, the cost has increased by about Tk 450. If that same 30 litres are used to transport goods by truck, the impact of that cost is spread over about 10,000 kilograms of goods.
So, while it may seem that fuel-price increases will drive inflation, when calculated per unit of transported goods, the impact is not significant enough to trigger major inflation.
"Also, you cannot take the economy to a point where fundamental balance becomes imbalanced. That is why all countries have adopted similar policies, and we have followed them modestly with a moderate price adjustment."
He notes that due to the Iran-related conflict, a global fuel crisis has emerged, affecting Bangladesh as well. To tackle this crisis, the government has taken initiatives to import fuel from countries that include India and Russia, the commerce minister informed the parliament.
"At the same time, imports of essential commodities have been increased to maintain normal supply."
mirmostafiz@yahoo.com
