Price hike rate higher than VAT hike, says finance adviser

Salehuddin AhmedFile photo

Finance adviser Salehuddin Ahmed has said the government had to hike value added tax (VAT) due to some economic constraints, though it created pressure on consumers. 

He, however, pointed out that the traders are raising prices at a rate which is higher than the VAT increase. The authorities already communicated this to the businesses.   

The adviser made the statement while talking to the media at the secretariat on Tuesday, following a meeting of the advisory council committee on economic affairs and the advisory council committee on government purchase. 

He said the government will review and take a comprehensive decision on VAT during the next budget. The recent decision on VAT hike was intended to phasing out long-standing VAT exemptions in different sectors. 

“In this process, some commodities become pricier and some people are suffering. The aim for now is to rein in inflation as much as possible,” he added. 

When asked how long it would take for inflation to reach a manageable level, the finance adviser said it could take another two to three months.

“Import of daily essentials will continue. Inflation is likely to come down to 6 to 7 per cent by June. However, the situation in Bangladesh will not be like that of Sri Lanka,” he added.

Explaining the economic context, Salehuddin Ahmed said a rising indicator usually does not subside until a collapse takes place. The share market may experience sudden fluctuations, but inflation follows a different pathway.