Inflation target set at 6.5pc for FY '25
FE REPORT | Friday, 7 June 2024
The government has set a target to bring down inflation in the next fiscal year to 6.5 per cent from the existing annual average of 9.73 per cent.
Finance Minister Abul Hassan Mahmood Ali expected to tame inflation riding on the policy strategies already adopted during the last couple of months.
"To control inflation, we gave highest priority to decreasing demand and increasing supply in the past two budgets," he said, placing the national budget for FY 2024-25 in parliament on Thursday. "Inflation is one of our main challenges at present."
To achieve macroeconomic objectives, he said the government has adopted supportive fiscal policies like reducing budget expenditure, discouraging less important expenditures and various austerity measures alongside pursuing a contractionary monetary policy.
In his budget speech, the minister said: "To control inflation, various steps are being taken to make the monetary policy a successful one. At the same time, supportive policies are being implemented in the fiscal sector as well."
Despite these measures, inflation in the country remains persistently above 9.0 per cent primarily due to import induced price increases and disruptions in the domestic supply chain, he mentioned.
"Therefore, we will follow fiscal consolidation as well as the reduction of the budget deficit, and will continue budget belt-tightening measures, even if on a limited scale in the budget for the upcoming fiscal year."
Mr Ali said the government supports like family cards and OMS programmes are being strengthened to protect the common people from adversities arising from high inflation.
Bangladesh's 12-month average inflation has already swelled to 9.73 per cent between the month of June 2023 and May 2024, the BBS data showed. The point-to-point inflation rate has surged to 9.89 per cent in May compared to the same month last FY.
The finance minister said the austerity measures will be maintained on a limited scale, but the scope of safety net programmes meant for low-income individuals will be expanded to protect them from inflationary pressure.
Alongside controlling the inflation, the new budget has been formulated with an emphasis on ensuring necessary funding for government priority sectors such as poverty alleviation, job creation, social safety net programmes, education, health, agriculture, and climate change impact mitigation, thereby prioritising future development trajectories, he added.