Inflation falls slightly to 9.67% in February

The point-to-point inflation in Bangladesh fell slightly to 9.67% in February compared to 9.86% in January, owing to the drop in prices of food and non-food items. 

According to Bangladesh Bureau of Statistics (BBS) data, seen by The Business Standard, the food inflation rate stood at 9.44% in February, while non-food inflation was 9.33%.

In January, the food inflation rate was 9.56% and non-food inflation was 9.42%.

The overall inflation has been above 9% since March 2023.

Food inflation had soared to 12.54% in August last year and dropped to 10.76% in November.

Meanwhile, the wage growth rate in February marginally rose to 7.78% from 7.77% in January. However, the growth rate has been below inflation for the past 25 months, BBS data shows.

Also, inflation rates have decreased in both rural and urban areas. Urban inflation declined to 9.88% in February from 9.99% in January. Rural inflation dropped to 9.48% from 9.70% in the previous month.

Food inflation in the city eased from 9.99% to 9.86% in February. Similarly, non-food inflation declined from 9.43% to 9.38% in February.

Zahid Hussain, former lead economist of the World Bank's Dhaka office, told TBS, "The decline in inflation in February is broad-based. Food and nonfood inflation declined in rural and urban areas. Whether it is a consequence of contractionary monetary policy or part of random monthly fluctuations is hard to gauge."

However, there was evidence that the foreign exchange constraint somewhat eased in February, while interest rates rose and credit growth declined, he said.

"Inflation rates have been on an up and down cycle for several months now, showing quite a bit of randomness," Zahid Hussain said, adding that the rate is still very high and real wage decline has continued.

"The authorities should stick to the tightening policy stance and keep the guards on," the economist added.