Inflation hits 11-year high in August

Inflation shot up to 9.86 per cent in August, which is the highest in the last 11 years and three months. According to the Bangladesh Bureau of Statistics (BBS) data, the figure declined slightly in the following month to stand at 9.1 per cent.

But the food inflation remained above the threshold of 10 per cent in the two months.

The BBS has prepared the inflation data and forwarded it to the planning ministry for final approval. The ministry is expected to release the official figures anytime soon, according to sources.

Bangladesh witnessed the highest ever inflation of 10.2 per cent in May, 2011 and the figure has never been above 9 per cent since then.

State Minister for Planning Shamsul Alam told Prothom Alo on Wednesday that inflation has been above 9 per cent in August and September, but there is nothing to panic about.

“Inflation will come down again from October and November when new vegetables and rice start hitting the market,” the state minister said, adding that the government initiatives worked well in inflation reduction.

The authorities, in an unprecedented move, raised the fuel oil prices up to 51 per cent in the first week of August, which pushed up the commodity prices. Also, the non-food products, like garments and educational materials, witnessed a significant price hike.

The economists then feared a high inflation in the country. The BBS is supposed to reveal inflation data on a monthly basis, but it did not publish the August inflation data in time. The bureau has now taken an initiative to disclose the inflation data of August and September at a time.

Inflation is similar to tax. When wages or income do not increase in line with the commodity prices, the people with limited income feel a mounting pressure as their real purchasing power declines. As a result, the vulnerable ones face a fear of being poor again.

The 9.1 per cent inflation implies that a product, which used to cost Tk 100 in September, 2021, now costs Tk 109.10. In August and September, the rise in the cost of living, including rice, oil, eggs, fish and meat, reflected in the inflation rate.

The inflation was 5.86 per cent in January and it rose steadily in the following six months. The figure crossed 6 per cent in February and touched 7 per cent in May.

The country posted a nine-year high inflation of 7.56 per cent in June, but the figure declined slightly to 7.48 per cent in July.

BBS killed time in releasing the inflation data of August and September. The specialised government agency generally publishes the inflation data of a month within the following month.

It prepared the inflation data of August in due time and sent it to the planning ministry, but did not disclose the data publicly due to lack of a green signal from the ministry.

BBS sent the inflation data of September to the ministry in the first week of the current month. It also took an initiative to publish the inflation data of two months at a time.

Planning Minister MA Mannan told Prothom Alo that the inflation data will be released in the next few days after informing the high ups.

Inflation is increasing mainly due to three or four reasons. The authorities raised the fuel oil prices in August, which pushed up the production cost of consumer and industrial products. Also, the transportation cost went up due to the fuel price hike.

Apart from that, the exchange rate of the dollar rose from Tk 86 to above Tk 100. It pushed up the import cost of commodities. The Russia-Ukraine war made the situation more critical.

Zahid Hussain, former lead economist of the World Bank's Dhaka office, told Prothom Alo, “The poor are now feeling the pressure of inflation more. The price of food products has increased in the aftermath of the rise in the fuel price. Whenever the food prices go up, the misery of the poor intensifies. They face a crisis in their livelihood.”

The noted economist also said “I heard that the price of electricity will increase. Then it will swell this high inflation further as electricity has more impact than fuel.”

He said it will not be justified to increase the price of electricity right now to keep inflation under control.