The overall inflation in Bangladesh stood at 9.24% in April, which was 9.33% in March, the highest in the last eight months, according to the latest data of the Bangladesh Bureau of Statistics (BBS) released on Wednesday.
Earlier in August last year, inflation in the country hit a record 9.52%.
According to BBS data, food inflation stood at 8.84% in April, down from 9.09% in March, while non-food inflation remained the same as the previous month at 9.72%.
The global economy was hit by a recession following the global pandemic and the Russia-Ukraine war. Bangladesh's economy is also affected by the recession and has been witnessing high inflation rates for the past few months.
BBS data shows the inflation rate in rural areas was 8.92% in April, lower than the 9.32% rate in March, while in urban areas, it increased from 9.36% in March to 9.68% in April.
However, officials said that the inflation figures for March and April are not directly comparable as the BBS started calculating inflation with a new base index of 2021-22, instead of the old base year 2005-06.
BBS reported a moving average inflation rate of 8.64% over the past 12 months from May 2022. The moving average rate of the May 2021-April 2022 period was 5.81%.
Zahid Hussain, former lead economist of the World Bank's Dhaka office, the inflation rate of 9.24% in Bangladesh is high by any standard, especially when the prices of various commodities are falling globally.
He said, "The inflation outlook depends on the global market situation and the policy decisions of the government. Except for a few items such as oil that depend on geopolitical factors, prices of other commodities are falling. Although some commodity prices remain high, no further increase is expected."
He added that the government's borrowing of around Tk66,000 crore from banks to meet the budget deficit has increased inflationary pressures.
Sayema Haque Bidisha, executive director of the South Asian Network on Economic Modeling (Sanem), said that the inflation rate of non-food products is increasing at a higher rate than that of food products and that living in urban areas has become more challenging than in rural areas.
"While inflation in food prices affects the livelihoods of low-income people, inflation in non-food products is hurting the middle-income group," she said.
She also said that the recent hike in prices of gas, electricity, and fuel oil could potentially contribute to a further increase in overall inflation in the future.
Wage rate increased but still below inflation
According to the BBS report, the wage rate in Bangladesh increased by 7.23% in April, which is 2.01 percentage points lower than the inflation rate.
The purchasing power or real income of the wage earners reduced in the last month, the report mentioned.
The growth in the wage rate index was 7.18% in March, which reflects an increase in wage growth in April compared to the rate in March.
The BBS officials said the national statistical agency started estimating inflation considering the price change of 749 commodities from food and non-food items. The number of commodities in the previous basket was 318 for the rural areas and 422 for the urban areas.
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 conducted by the BBS in 2016-17.
Zahid Hussain said that previously inflation was calculated based on different products in rural and urban areas, but now the prices of the same products are being considered in both regions, which makes it easier to compare inflation between the two.
Mentioning some positive changes in the methodology, he, however, pointed out several inconsistencies. One of the inconsistencies is that the new series has included several sectors where there is no data available.
Additionally, while the 2021-22 fiscal year has been taken into consideration for the price of products, the consumption pattern has been taken from the Household Income Expenditure Survey of the 2016-17 FY despite having the data for 2022, said Zahid Hussain.