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Inflation reaches 9.94% in May, highest in over a decade

Mohammad Zakaria
06 Jun 2023 00:00:00 | Update: 06 Jun 2023 00:01:28
Inflation reaches 9.94% in May, highest in over a decade

While the government has set a target to attain an average inflation rate of 6 per cent in the next fiscal year, the general point-to-point inflation rate increased by 0.7 percentage points to 9.94 per cent in May this year compared to a month ago, which was the highest in over a decade.

The inflation rate was 9.24 per cent in April, 9.33 per cent in March, and 8.78 per cent in February, according to the Consumer Price Index (CPI), Inflation Rate and Wage Rate Index (WRI) in Bangladesh.

Inflation may accelerate further in June as the government imposed different types of tax measures, which would further push the prices of essential commodities up, said experts.

The Bangladesh Bureau of Statistics (BBS) on Monday revealed the latest inflation data. The inflation rate was the highest, 10.2 per cent, in 2011.

Meanwhile, Bangladesh’s inflation reached 9.52 per cent in August last year due to rising commodity prices and record hikes in fuel prices. But it declined to 9.1 per cent in September. The August inflation rate was the highest in 11.3 years.

The government has set a target of 6 per cent inflation in the proposed national budget for the fiscal year 2023-24 and 7.5 per cent average inflation in the current fiscal year.

In the budget speech, Finance Minister AHM Mustafa Kamal told parliament due to the decrease in the prices of fuel, food, and fertiliser in the global market, along with the adjustment of fuel prices in the domestic market and government initiatives to keep the food and supply systems normal, inflation will remain much controlled in the next fiscal year and the annual average inflation is expected to stand at around 6.0 per cent.

However, the increase in import costs due to the post-war global inflation and the depreciation of the country’s foreign exchange rate led to a surge of average inflation to 9.5 per cent in August 2022, the minister said.

As a result, it will not be possible to keep the annual average inflation within 5.6 per cent as per the target in the current financial year, he added.

Food inflation rose to 9.24 per cent in May, up from 8.84 per cent in April. Also, non-food inflation escalated to 9.96 per cent in May from 9.72 per cent in the previous month.

Urban inflation rises more than rural

The inflation in urban areas rose at a higher rate than that in rural areas in May. In May, rural inflation increased to 9.85 per cent from 8.92 per cent in April.

Food inflation in rural areas was recorded at 9.34 per cent in May, up from 8.78 per cent in April.

The non-food inflation also increased to 9.83 per cent in May, up from 9.33 per cent in April, in rural Bangladesh. Urban inflation increased to 9.97 per cent in May from 9.68 per cent in April.

The food inflation in urban areas was recorded at 9.13 per cent in May, up from 9.10 per cent in April. However, the non-food inflation in urban areas decreased to 9.88 per cent in May from 9.96 per cent in April.

State Minister for Planning Prof Shamsul Alam said Bangladesh’s inflation rate has increased as fuel prices are increasing in the world market but it cannot be said now whether inflation will increase further or not.

“Our production and supply chain is good. We think inflation will be in control as the government has taken measures to tame it,” he added.

President of the Consumers Association of Bangladesh (CAB) Golam Rahman told The Business Post the BBS inflation figures are not reflected in the real situation of the prices of essentials in the market.

He said the real inflation rate is more than what the BBS says, adding the prices of all kinds of essentials are high in kitchen markets.

“The inflation situation has significantly worsened, which has already impacted the low- and middle-income people across the country significantly.

“It is difficult for those with limited income to survive during this high inflation. The government should increase the wages of these people,” Rahman also said.

The government should control inflation by increasing the monitoring system in both wholesale and retail markets to stabilise the prices of essentials, he added.