High inflation in Bangladesh has revealed the inherent weakness in the government’s domestic resource mobilisation approach, which is largely dependent on revenue collection from indirect taxes, said the Centre for Policy Dialogue (CPD) today.

Export earnings, the largest source of foreign currencies for Bangladesh, slowed in May reflecting the fall in demand in western economies reeling from the crisis caused by higher inflation, the Russian–Ukraine war and supply chain bottlenecks.

The government has ramped up its measures to contain the pressure on foreign currency reserves and inflation, drafting an action plan to discourage non-essential imports and bring relief to the poor and the vulnerable from the spiralling cost of living.

Central banks around the world have commenced hiking policy rates in order to contain the inflationary pressure stemming from the ongoing global supply chain disruption and demand recovery.

Reportedly, there is no shortage of it in the country

Inflation shot up to 6.29 percent in April – highest in 18 months – amid persistently high food prices and non-food prices, said Bangladesh Bureau of Statistics (BBS) last evening (May 18, 2022).

Bangladesh has been feeling this inflationary pressure since June 2020.

At the beginning of 2022, Bangladesh’s economy seemed to be on course to grow at a faster clip buoyed by plummeting coronavirus infections, rebound in economic activities and the reopening of global economies.

Inflation in Bangladesh rocketed to a 17-month high in March driven by higher food costs as global uncertainties stemming from the Russia-Ukraine war and supply chain disruptions show no sign of abating, official figures showed yesterday.