October 14, 2022
DHAKA – We’re worried by the continuing inflationary trend which seems poised to hit a boiling point, with data released by the Bangladesh Bureau of Statistics (BBS) saying that inflation hit a 10-year high in August. Overall, inflation surged to 9.52 percent in August, then dropping to a still-high 9.10 percent in September. Ordinary people, however, don’t need BBS figures to know how badly prices have been spiralling out of control in recent months. Their daily suffering stands as living proof of that.
Inflation, which has been ongoing since the outbreak of the pandemic in Bangladesh, has been out of control for the past several months due to higher food prices amid global supply chain disruptions and trade uncertainties arising from the Russia-Ukraine war. Data shows that food inflation soared to 9.94 percent in August – the highest since April 2012 – and decreased slightly to 9.08 percent in September. Non-food inflation, on the other hand, was 8.85 percent in August, but jumped to 9.13 percent in September, indicating that the inflationary momentum is yet to dissipate. Another major concern is that inflation in rural areas has been worse than in urban areas – 9.70 percent in August, as opposed to 9.18 percent in urban areas during the same month. Food inflation in rural areas was similarly higher, since markets there tend to be more volatile than those in urban areas.
Therefore, we once again urge the government to consider lowering fuel prices at the earliest possible time, since it has had a cascading effect on prices of all other commodities.
This calls for greater government assistance for lower- and fixed-income groups. But equally importantly, it indicates that the assistance needs to be better targeted, with food assistance for people living in rural areas becoming more urgent. Additionally, while external shocks are definitely big factors that are driving inflation, the recent fuel price hike in the country has, as anticipated, only made things worse. Therefore, we once again urge the government to consider lowering fuel prices at the earliest possible time, since it has had a cascading effect on prices of all other commodities. The government also urgently needs to curb corruption and wastage in the energy sector, which have gone totally out of control, leading to the return of frequent load-shedding that is only increasing production costs and commodity prices for end consumers.
Because there is no single policy intervention that can solve the current crisis, the government needs to try and tackle it on multiple fronts. Firstly, the government needs to scale up its subsidised food assistance programme for the poor. It needs to reduce corruption and mismanagement across all sectors, which seems to have become synonymous with governance these days. And finally, it needs to actively monitor the supply of essential commodities, such as different food items, and make sure that it is proactive in addressing any artificial supply shortage. In that regard, regular market monitoring by relevant government agencies is vital to root out any collusive practices by powerful trade syndicates.