The persistent inflation in Bangladesh hit a seven-month high of 9.89% in May, up from April's 9.74%, reflecting a significant rise in food prices in both rural and urban areas, according to the Bangladesh Bureau of Statistics (BBS).
Food inflation rose to 10.76% in May from 10.22% in April, while non-food inflation dropped to 9.19% from the previous 9.34%.
The BBS released the May issue of the regular publication titled "Consumer Price Index (CPI), Inflation Rate and Wage Rate Index (WRI) in Bangladesh" on Monday (3 June).
The report revealed that the moving average inflation of the last 12 months reached 9.73%, significantly higher than the budgetary target to control annual average inflation within 6%. The moving average of the previous year was 8.84%, marking an increase of 0.89 percentage points in a year.
Inflation in rural areas reached 9.99% in May, up from 9.92% in April. This is the highest level of rural inflation since the 2011-12 fiscal year. Food inflation in rural areas increased to 10.73% in May from 10.25% in April, while non-food inflation dropped to 9.31% from 9.60%.
Urban inflation for both food and non-food items rose to 9.72% in May from 9.46% in April. Urban food inflation climbed to 10.86% from 10.19%, and non-food inflation edged up to 9.03% from 9.01%.
Experts and economists warned that the sharp rise in inflationary pressures poses a significant challenge to the economy, particularly for fixed-income earners whose wages have not kept pace with inflation. They attributed the inflationary pressure to supply-side disruptions and higher production costs, urging immediate measures to address power and energy crises to ease production activities.
They also recommended enhancing market monitoring to ensure competition and accelerating cash or food support for the poor to help them cope with inflation. Dr.
Monzur Hossain, Research Director of the Bangladesh Institute of Development Studies (BIDS), emphasized that the limited income group, particularly poor people, are under severe pressure due to higher living costs. He suggested the government increase food and cash support for these individuals.
Dr Hossain also called for reducing indirect taxes, particularly Advanced Income Tax, Customs Duty, Supplementary Duty, and VAT on imports, to lower the prices of essentials. He stressed the importance of proper monitoring against market collusion and syndication to ensure fair competition.
BBS officials noted that the national statistical agency has started estimating inflation by considering the price changes of 749 commodities, up from 318 for rural areas and 422 for urban areas in the previous basket. The weight of the items in the basket has been distributed according to the consumption pattern found in the latest Household Income and Expenditure Survey (HIES) conducted by the BBS in 2016-17.
They explained that the 9.89% point-to-point inflation means that a basket of goods and services worth Tk100 last year would now cost Tk109.89. Consequently, people with unchanged incomes are now bound to consume fewer items worth Tk9.89.
Despite an increase in wages, the growth rate has lagged behind inflation. The income of wage earners increased by 7.88% in May, which is 2.01 percentage points lower than the inflation rate, according to the BBS report. The wage growth rate was 7.85% in April, marking a mere 0.03 percentage point increase in a month. As a result, the purchasing power or real income of wage earners has declined.
