Monthly inflation surged to a 12-year high of 11.66 per cent in July, which is a significant increase from June's 9.72 per cent.
According to data released by the Bangladesh Bureau of Statistics (BBS), the inflation was mainly driven by the food item price. Food inflation reached a record high of 14.10 per cent in July, while non-food inflation stood at 9.68 per cent. In comparison, these figures were 10.42 per cent and 9.15 per cent respectively in June.
The previous peak for inflation was 9.94 per cent in May.
The general point-to-point inflation both in the urban and rural areas also increased last month.
In July, Bangladesh experienced significant civil unrest centring widespread protests. The quota system, which had long been a point of contention, was seen by many as unfair and in need of change to ensure a more merit-based approach to employment in the public sector.
As the protests gained momentum, the government's response became increasingly severe and demonstrators eventually shifted demands to the resignation of the government. In response to the escalating unrest, the government imposed curfews in various areas.
The curfews aimed to control the protests and reduce the chaos, but they had severe side effects on daily life and economic activity. The imposition of curfews led to substantial disruptions in supply chains.
Businesses struggled to operate normally due to restrictions on movement and trade, leading to shortages of goods. The inability to transport goods and conduct business as usual caused prices of essential commodities to rise sharply.
Rail and port services, crucial for transportation and trade, were suspended during this period. This suspension further exacerbated supply chain disruptions, affecting both the availability of goods and the timely delivery of products. The combination of supply shortages and increased transportation costs contributed to the surge in commodity prices, which in turn played a significant role in the spike in inflation observed in July.
Economists believe that an inflation spike in July was expected due to disruptions caused by the curfew.
There was limited market communication during this period as a result commodity prices shot up both where there was a shortage of supply and even in surplus areas. Uncertainty and hoarding, as people bought supplies in bulk, contributed to the inflation surge as well, they said.
