Bangladesh inflation escalated to 9.5% in August, according to State Minister for Planning Shamsul Alam, thanks to rising commodity prices and record hike in fuel prices.
"Though the price gain spiralled in August, it declined to 9.1% in September," he told The Business Standard on Wednesday.
The annual point-to-point inflation in July was 7.48%. As such, inflation increased by 2.02 percentage points in August.
In the first week of a month, the Bangladesh Bureau of Statistics (BBS) usually publishes the inflation data of the previous month. But the state-owned agency is yet to publish the August data officially even though September has ended.
According to BBS data, general inflation, with the 1995-96 base year, jumped to 11.97% in September 2011. Subsequently, the base year was updated to 2005-06 as 11.97% was the highest in the past 20 years.
With the new base year, the average inflation of the 2010-11 fiscal year stood at 10.91%. Point-to-point inflation has not exceeded 9% in any month since then. As such, inflation in August and September is the highest in the last 11 years.
Prices of goods and services have been soaring on the back of a pent-up demand as economies rebooted by brushing aside Covid fallout. Amid the half-patched recovery, the military conflict between Russia and Ukraine caused a serious bump to the international supply chain in February. Western sanctions to punish Russia for the Ukraine invasion met with an unusual surge in fuel, energy, food and fertiliser prices.
With the increase in import costs, the prices of food and edible oil in the local market also increased gradually. The authorities in August hiked fuel prices by record 40%-50%, which the economists believe had played the key role in mounting the inflationary pressure.
Fuel shock sent a devastating shock to the local commodity market. Though the government reduced fuel prices by Tk5 per litre late-August, the squeezed market did not have any reflection of that, they noted.
Earlier, the Finance Division, in a report, projected that inflation might surpass 9% if the subsidies on fuel and gas are withdrawn. The division also assumed that it might take at least 12 months for the effects to reach a tolerable level.
"The sudden rise of fuel price by a great extent had an impact on everything, which pushed up inflation in August. It, however, dropped in September thanks to various government measures," the State Minister for Planning Shamsul Alam told the local media.
Planning Minister MA Mannan, earlier at an event, unofficially said that inflation declined in September. The sales of different essential commodities at subsidised prices for the lower-income people contributed to the fall in inflation, he claimed.
On the delay in publishing inflation data, the minister also said it took time due to procedural reasons. "But when it is revealed, it will be done with transparency. There will be no engineering on inflation data," he added.
The Bangladesh Bureau of Statistics collects data on the prices of different products from different markets across the country between the 12th and the 18th of every month. This information is processed and the inflation report is prepared within the current month.
At the beginning of next month, the BBS publishes the report subject to the approval of various departments of the government, including the planning ministry. Sometimes, the report is also presented in Ecnec meetings.
The pattern of inflation data publication shows the BBS delays in making the report public when inflation rises suddenly for any particular reason.
The September inflation of Bangladesh is slightly higher than neighbouring countries except for bankrupt Sri Lanka and debt-burdened Pakistan.
In the month, Nepal posted 8.26% inflation, India 7%, Bhutan 5.6% and the Maldives only 2.48%. However, inflation was highest in Sri Lanka at 59.8% and Pakistan at 23.2% last month.
The Euro zone countries, Bangladesh's key export destination, have been witnessing high price gains. The region registered a double digit inflation on an average last month compared to 3.2% a year earlier.
Inflation was 17.1% in the Netherlands, 12% in Belgium, 10.9% in Germany, 9.5% in Italy, 9.3% in Spain and 6.2% in France.
In July, overall inflation in the country was slightly lower to 7.48% than the previous month. Of it, food inflation stood at 8.37% and non-food items at 6.33%.
Food inflation rose further in September, a source from the statistics bureau told The Business Standard.
Sayma Haque Bidisha, Dhaka University economics professor and research director of the South Asian Network on Economic Modeling (Sanem), told The Business Standard that inflation surged in the last couple of months due to an increase in fuel, energy and food prices. Some portion of the inflation is explainable as import costs increased due to higher prices and unstable exchange rates.
As the unexplainable portion of the inflation, she pointed to transport sector extortions and market manipulation.
The economist also said the inflation in Bangladesh would reduce in the midterm on the back of cheaper food, fuel and energy in the global market due to the onset of a recession.
She also urged the government to expand social safety net programmes for the poor and middle-income people to cope with the inflation shock.