Containing inflation emerging as a major economic challenge

Unabated inflationary pressure has been the most disconcerting development of the Bangladesh economy so far this fiscal. According to the latest estimate by the official Bangladesh Bureau of Statistics (BBS), the price pressure has mainly been driven by increases in food prices whereas the rate of inflation in non-food areas has reportedly been holding steady or even declined. On its part, the government had set a target in June last year to limit inflation to around 6.50 per cent in the current fiscal. But the point-to-point price inflation jumped to a new high of 10.67 per cent last April, according to the BBS figures. But it requires no expertise to assess the impact of inflation at this high rate on the costs of living as a whole and the consequent pains suffered by the people with limited or modest incomes. Food prices have also a vital relationship to costs of other goods and services. For example, a rickshawpuller will hike up fares charged by him on the ground of higher priced rice as a sort of compensation mechanism. A seller of perishables does the same citing the same reason. In this context, it remains doubtful whether the contention of BBS about prices of non-food products or charges not rising has much relevance to the current costs of living worries of people. As it is, the recent-hike in transportation fares centering on the rise in the administered prices of petroleum products and compressed natural gas (CNG), has created another pretext on the part of sellers to increase prices and charges of goods and services respectively. The house rent charges have also marked a steady rise so far in the current fiscal. Thus, it is only practical to assume that the rate of inflation has crossed the double digit mark and every effort should be made to bring it down. The country just has had a bumper harvest of boro rice. The output from this harvest is expected to be the highest ever. In this season of abundance of the locally produced rice, its price should be falling like always. But the price of rice in retail markets is still to come down after the harvesting of boro crop. One of the reasons for this, from the rice traders, is that higher transportation costs, caused by the recent decision to increase prices of fuel oils and CNG, have added to carrying costs which have been translated into higher prices of rice. But it was estimated reliably that transportation costs may have increased by six poisha only for carrying one kg of rice which should be really inconsequential. There is, thus, a striking mismatch between the transportation and other related costs in reality and the official estimates about the same. Furthermore, the price-behaviour of both food and non-food items in the retail markets that do really matter for the ordinary citizens, leaves a lot of things unexplained. This is particularly the case with the large difference between what the end-users i.e., consumers, pay and what the actual growers receive at the field-level. It is noteworthy that prices of sugar, cooking oil, milk foods and some spices have also increased recently, apart from that of main food items over the recent months. Imported prices of some such items have been under pressure in the international market for a considerable period of time this year, through the most recent trends indicate some modest decrease in their prices. Meanwhile, the depreciation of Bangladesh Taka in relation to its intervention currency -- US dollar -- notwithstanding the loss of the value of the latter in relation to other major international currencies, has also exerted some upward pressure on the domestic prices of imported commodities. In addition to this, the domestic money supply has been expanding beyond the year-beginning target. As such, the domestic inflationary pressure merits a serious review -- more than a business-as-usual one -- from multi-dimensional angles, if appropriate measures are to be taken to help rein in the prices. Now, there are fears about another round of heartless ripping off of consumers before and during the coming Ramadan and the Eid. Price control was at the very top of the agenda of the incumbents in power during the election. But the government is yet to redeem its promise in this regard, notwithstanding reiterations from its leading figures about imminent better market monitoring and co-ordinated actions to ease off price pressures to help mitigate the sufferings of the common people.