Thursday, 23 May, 2024
Thursday, 23 May, 2024
The Daily Post

Inflation still out of control

Economic Reporter

Inflation still out of control

# Averag inflation above 9 pc per month this yr

# Average inflation in March was 9.81 pc

# Where only food inflation was 9.87 pc


Despite the concerned ministry claimed that inflation was gradually coming down, no hope appeared as the country’s economy faces multifaceted crisis.

According to the Bureau of Statistics (BBS), the average inflation in March was 9.81 percent where only food inflation is 9.87 percent.

Economists fear that the inflation rate may go up further in the future as the price of the dollar has increased by Tk 7 in one jump. In other words, it is very difficult to bring down the government's revised inflation target to 8 percent by June of the current financial year.

Meanwhile, the inflation target was set at 6.5 percent in the budget for the financial year 2023-24. Inflation occurs in many countries due to the increase in the price of commodities and fuel oil in the world market. Again, due to the normal supply of goods in the international market and the decrease in prices, many countries come down gradually. In that case, inflation in Bangladesh continues to rise.

To deal with the situation, the target for the current fiscal year was increased from 6.5 percent to 8 percent. However, according to the BBS, inflation is higher than the revised target at the moment.

Meanwhile, Finance Minister AH Mahmood Ali approved the inflation target for the next three fiscal years at a meeting of the government's 'Coordination Council on Monetary and Exchange Rate'. There is 6.5 percent for the financial year 2024-25. It will be announced in the next budget. Apart from this, the inflation target has been set at 6 percent for the fiscal year 2025-26 and 5.5 percent for the financial year 2026-27.

According to a monitoring report of the Finance Division, the average inflation rate in the country from 2009-2021 was 6.55 percent. But this year, the average inflation is above 9 percent every month. After the Covid pandemic, there was a significant increase in demand and volatility in the global supply chain due to the Russia-Ukraine war. If inflation increases, its impact comes on Bangladesh as well.

In the meantime, inflation targets in many countries of the world have been reduced. Global inflation was 8.7 percent in 2022, which is gradually declining. Global inflation is expected to fall to 5.8 percent this year. The Consumer Price Index (CPI) inflation in the developed world is falling from 4.6 percent in 2023 to 2.6 percent in 2024, the IMF monitored. Inflation in emerging and developing economies was 8.4 percent in 2023, but in 2024 it was estimated at 8.1 percent.

Dr Zahid Hussain, former chief economist of the World Bank's Dhaka office, said there is talk of reducing inflation. But if you adopt a policy that will reduce it, there will be credibility. What will be the changes in the fiscal policy to reduce inflation, what initiatives will be taken to reduce the budget deficit.

He also said that there should be a commitment not to take money by issuing special bonds from the central bank to finance the money by printing money and meeting the deficit budget. Such a decision will actually help to understand whether inflation will go in the direction of control estimates.

The economist believed that to achieve the target, it has to be seen whether the government's macroeconomic management is consistent with the outline.