9.72pc inflation, 10.42pc food inflation in June

Representational image of inflation

Bangladesh has registered a minimal decline in inflation as it recorded an overall inflation of 9.72 per cent in June, slightly down from 9.89 per cent in May. 

Food inflation also maintained a similar trend as it declined to 10.42 per cent in June, from 10.76 per cent in May, according to the latest inflation updates of the Bangladesh Bureau of Statistics (BBS). 

A 9.72 per cent inflation means consumers had to spend Tk 109.72 to purchase a product this June, which used to cost them Tk 100 in June last year.

It indicates the cost of living has increased proportionately, and subsequent hardships of the people, particularly the low and limited income groups. 

Non-food inflation also eased slightly to 9.15 per cent in June, from 9.19 per cent in May. 

Bangladesh has been experiencing high inflation rates over the threshold of 9 per cent for the past two years. Efforts to keep it in check remained unsuccessful, except for slight fluctuations. 

Economists believe that high inflation is now one of the major challenges for the economy. 

According to experts, inflation is a form of tax that impacts people from all walks of life. When inflation outpaces income growth, the purchasing power of poor and middle-income families diminishes to a significant extent, making it tough for them to sustain their livelihoods.

Some experts even believe the actual inflation to be higher than the BBS estimation.

Meanwhile, the government has planned to bring down inflation to 6.5 per cent within the fiscal year 2024-25.

In his budget speech at the parliament last month, finance minister Abul Hassan Mahmood Ali said, “We are expecting that the inflation rate will come down to 6.5 per cent in the next fiscal year as an outcome of the policy strategies that we have adopted.”

He noted that the government adopted a series of contractionary monetary policies, aligning with global trends. The central bank has significantly increased interest rates, with the policy interest rate now at 8.5 per cent, the Standing Lending Facility (SLF) rate at 10 per cent, and the Standing Deposit Facility (SDF) rate at 7 per cent.

Besides, the Six Months Treasury Bill based Interest Rate Determination System (SMART) has been abolished and made a market-based system. Under the new system, loan demand and interest rates will be determined by credit supply and the relationships between bankers and customers.

These monetary measures are part of a broader strategy to curb inflation, which has been affecting the economy and the common people.

The government has also implemented supportive policies. Programmes like the Family Card and Open Market Sales (OMS) are being bolstered to mitigate the adverse effects of inflation on vulnerable populations.

The government is optimistic that these combined policy strategies will reduce the inflation rate to 6.5 per cent in the current fiscal year.