It is the highest in at least a decade

The problems are economic, social and political in nature.

Inflation, which erodes the purchasing power for consumers as well as businesses, happens in two ways.

The latest inflation rate is the highest at least since 1984

The annual average price spike in Bangladesh surged to its highest level in 12 years in the just-concluded fiscal year despite easing in June, reflecting the persistent erosion of real income and the deterioration of the living standards of low-income groups.

Bangladesh Bureau of Statistics releases data today

Finance Minister Abul Hassan Mahmood Ali yesterday expressed hope that the government would be able to curb high inflation on the back of budgetary measures and the central bank’s steps.

The proposed national budget for fiscal 2024-25 lacks concrete measures for addressing the current economic concerns, such as runaway inflation and depleting foreign exchange reserves, the Centre for Policy Dialogue (CPD) said yesterday.

The new budget for the upcoming fiscal year is unlikely to provide respite from one of the longest spells of sustained inflation in Bangladesh as the government’s measures appear to be missing the impetus required to contain the price spiral.

The Consumer Price Index grew by an average of 9.73 percent in the first 11 months of the current financial year, which was 8.64 percent during the identical period a year prior, data from the Bangladesh Bureau of Statistics showed.

The national budget for the fiscal year of 2024-25 is going to be presented in parliament on Thursday with monumental tasks ahead for the government to collect more revenues and contain stubbornly high inflation.

Fighting raging inflation and putting the economy back on track have not been taken seriously as evidenced from the government’s delayed response, which set the scene for one of the worst economic crises in its history and an unprecedented prolonged period of higher consumer prices, said an economist. 

According to a provisional estimate of the Bangladesh Bureau of Statistics (BBS), consumption of goods and services grew 3.53 percent in 2023-24, up from 2.52 percent in the last fiscal year.

Bangladesh's factory output grew 6.66 percent in the current fiscal year, the slowest pace of expansion since the Covid-19 pandemic hit the country, as the stubbornly high inflation hurt domestic demand and the shipment of export-oriented goods slowed.

Government must address the rising food prices immediately

According to the Bangladesh Bureau of Statistics (BBS), food inflation jumped 35 basis points to 10.22 percent last month from 9.87 percent in March. This was the first time in five months that food inflation hit double digits.

Inflation in Bangladesh fell seven basis points to 9.74 percent in April from a month ago on the back of declining prices of non-food items.

Inflationary pressure may push some “vulnerable” households below the poverty line.

To many, especially salaried and fixed-income individuals, this means they will have no option but to find ways to cut expenditures to bear increased electricity bills.

The vicious cycle of taking loans to pay bills and then taking another loan to pay off the first loan may continue throughout their lives, with little or no real improvement in their living standards.