The point-to-point inflation rate jumped by 0.07 percentage point in April to 6.29%, the highest in 18 months, mainly because of soaring commodity prices in the international market, appreciation of dollars globally and a rise in domestic household demand.
The overall inflation was 6.22% in March.
The inflation rate for nonfood items saw a big jump of 0.35 percentage points to 6.39%, while food inflation dropped to 6.24% from 6.34% a month ago. And, inflation also increased in urban and rural areas, according to a report released by the Bangladesh Bureau of Statistics (BBS) on Wednesday.
The regular BBS release titled "Consumer Price Index (CPI), Inflation Rate and Wage Rate Index (WRI) in Bangladesh" revealed that the average inflation for the last 12 months was 5.81%, substantially higher than the government target of 5.5%. The average inflation was 5.6% in the previous year.
Economists say the Russia-Ukraine war has pushed up the global inflation exacerbating the international markets that were already heated up in the wake of the recovery from the coronavirus pandemic.
Gas, oil and other fuel prices set new records in the world market. As the war started in the main supplying area of wheat, its price in the world market went up by about 50%.
Soybean and palm oil prices went up by about 60% in the domestic market owing to an increase in edible oil prices in the international market.
The point-to-point inflation, calculated by the consumer price index, indicates the degree of increase in the cost of living in a particular point of time in comparison with the same period a year ago.
The April inflation of 6.29% means that a product or service that cost Tk100 in April last year is now causing consumers to spend Tk106.29. People have to skimp on consumption if their income remains unchanged or it increases at a rate lower than inflation.
The wage rate index increased by 6.28% in April compared to the same time of the previous year, 1 basis point lower than the inflation rate.
Wages in the fisheries sector increased by only 2.82%, while the rate is 4.75% for labourers working in the construction sector. Real income or purchasing power of the people decreased as their wages increased at a lower rate than inflation.
According to the BBS report, inflation in rural areas reached at 6.59%, which was 6.52% in March. Food inflation in rural areas reduced slightly and stood at 6.64% from 6.71% in March.
But nonfood inflation in urban areas stood at 6.50% with a long jump from 6.15% in March. The inflation rate in urban areas also increased to 5.75% from 5.69% a month ago.
Dr Zahid Hussain, former lead economist at the World Bank's Dhaka office, told The Business Standard that prices of many products that have no connections with the global market are increasing too, meaning that domestic demand has played a part in rising inflation.
"So, we need to cool off domestic demand. We should not go for a further expansion of monetary policy," he said.
To tame inflation, the government should increase policy rates like many central banks, such as the Bank of England and European Central and State Bank of India, have done, he added.