Official figures reveal that Bangladesh’s inflation remains stubbornly high, with the Consumer Price Index (CPI) for July registering at 9.69%, only slightly down from the previous month’s 9.7%. Despite global market trends showing a modest recovery, domestic factors driven by monetary and fiscal policy mismatches seem to be perpetuating inflationary pressure.
This persistent inflation rate has exceeded the annual target by nearly 4.0 percentage points, causing concern among economists.
They attribute the sustained high inflation to the rigorous monetary policy enforced by the central bank since July. Notably, the rural inflation rate slightly outpaced the urban rate, standing at 9.8% compared to the urban rate’s 9.4%.
Analysts emphasize that the country’s economic landscape enters the new fiscal year with no signs of immediate relief from inflationary anxieties.
Bangladesh Bank’s implementation of the SMART rate system, linked to short-term treasury bills, has led to a 1.0-percentage point hike in interest rates on the financial market. Indirect taxation is also identified as a significant contributor to the elevated inflammation levels in the country.
In a noteworthy development, the Bangladesh Bureau of Statistics (BBS) has modernized the CPI calculation method, adopting the 2021-22=100 base index and shifting to twelve groups based on the Classification of Individual Consumption by Purpose (COICOP). This shift involves a total of 383 items, with 127 food items and 256 non-food items.
Although international economic conditions appear to be stabilizing, Bangladesh grapples with its economic challenges.
The high inflationary pressure continues to raise concerns among economists and policymakers, as measures to address the issue remain elusive.
As the nation enters a new fiscal year, the need for effective policies to curb inflation takes center stage, impacting both consumers and the broader economy.
