Bangladesh's rate of inflation declined slightly to 7.48% following months of increase, with a drop noticed in food inflation as well, prompting finance and planning ministers to state that they expect further falls in the coming month.
Overall, inflation dropped by 0.08 percentage points in July after five months of sharp increases. Food inflation stood at 8.19%, registering a drop of 0.18 percentage points from June.
Releasing the summary of the latest report by the Bangladesh Bureau of Statistics (BBS), Planning Minister MA Mannan at a press briefing pointed out that overall fall in inflation largely depended on a reduction in food inflation.
The rate of inflation would fall further in the coming months as commodity prices were falling in the global market, he said.
Hoping that the price of the dollar will come down, Finance Minister AHM Mustafa Kamal also said inflation may return to normal within the next one to two months.
After the meeting of the Cabinet Committee on Economic Affairs and Cabinet Committee on Government Procurement on Wednesday, the finance minister echoed the planning minister, saying the current inflation is due to the increase in the price of goods in the international market.
He also said there is no opportunity to control inflation by increasing loan interest rates, but the focus will be on using other types of management such as initiatives to control imports through increasing duty and LC margins.
Inflation in Europe was 5.1% last January but rose to 7.9% in July. Mustafa Kamal said that price inflation in Bangladesh has increased due to the purchase of products from European countries.
The finance minister said inflation was 12.3% when the Awami League took office in the fiscal 2008-09.
Since then, the government has faced a number of crises, including the Covid-19 pandemic and the Russia-Ukraine war. In spite of these, the country's economy has been on a positive trajectory, he said, expressing hope that the situation will normalise soon.
However, a finance ministry report in June predicted that domestic inflation might peak in the third quarter of 2022 before starting to cool down towards the end of 2023 with the projected easing of global commodity prices.
The inflation is well above the target of 5.6% set for FY23 and it is not possible to gauge what level the rate will reach in the ongoing fiscal year due to the global commodity market volatility, another report of the ministry said.
Meanwhile, the planning minister struck an optimistic note, pointing out that supplies of food have resumed from Ukraine and Russia, while Aman cultivation also began earlier.
He said inflation for non-food items increased by 0.06 percentage points in July and stands at 6.39%.
Mannan said the fall in inflation has been observed in both urban and rural areas, adding that reducing inflation is a significant issue and a wide range of measures have been discussed about tackling the problem.
"Some people are anticipating that the economy may face a financial crisis, perhaps even go into a position like Sri Lanka. As we have faced no major crisis in the last two months, such a serious crisis will not arise in the near future," he said.
The minister said the BBS report was compiled after analysing the change in prices of 422 products and services all over the country.
But the research organisation employed to analyse the BBS report used the price of rice, pulses and oil – the main basket of goods of the poor.
The BBS report showed that the moving average of the last 12 months stood at 6.33%. The average inflation for the period August 2020-July 2021 was 5.54%.
Point to point inflation (compared to the same period in the last year) in June was 7.56% - a nine year high.
Analysing the BBS data, overall inflation in January was 5.86%. With a 1.7 percentage point increase in five consecutive months, it reached 7.56% in June.
Prices of both food and non-food items ticked up in June. Food prices kept rising to 8.37% while the rate in the previous two months was 8.30% and 6.23%.
According to a finance ministry report, Bangladesh may have to wait one-and-a-half years more for the rising inflation to melt away as global prices for energy, grains and metals have soared substantially since the Russia-Ukraine war and the taka continued to lose value against the dollar.
According to another internal report of the ministry, Bangladesh set an inflation target of 5.6% for FY23, but now it is not possible to gauge at what level the inflation rate will reach in this current fiscal year because global commodity prices, including of fuel and food, still remain above pre-war levels alongside the devaluation of the taka.
The BBS measures inflation every month to study changes in costs of living faced by people.
A set of products and services which cost Tk100 last year is now worth Tk107.48.