There seems to be no taming inflation, as data from Consumer Price Index of the Bangladesh Bureau of Statistics (BBS), shows that it rose to 9.86% in January from 9.41% in December.
In BBS’s latest report, Bangladesh's gross domestic product (GDP) slowed down to 5.78% in the last financial year, the slowest growth in 13 years.
Economists say that the country has been experiencing high inflation for over a year. The inflation percentage given for January 2024 is mainly compared with January 2023.
Accordingly, with the high inflation in January last year, the pressure of inflation has increased in January this year.
Inflation in January
In December, the overall inflation stood at 9.41%, marking an eight-month low. But in January it surged again.
BBS latest data showed, food inflation eased slightly in January, but non-food inflation rose sharply.
Non-food inflation rose to 9.42% in January from 8.52% in the previous month.
On the other hand, food inflation decreased to 9.56% in January, which was 9.58% in December.
Data shows that inflation has increased in both rural and urban areas.
Inflation in the city rose to 9.99% in January. The rate was 9.15% in the previous month.
Rural inflation rose to 9.70% in January from 9.49% in December.
Regarding inflation calculation, BBS informed, for computation of CPIs, two consumer baskets are used: (i) urban basket and (ii) rural basket.
These basket items (goods and services) were determined based on HIES 2016-17 for private consumption of population.
BBS collects price data from 154 markets across the country, including 12 from Dhaka City, four from Chittagong, 18 from other six divisional towns, 56 from the rest 56 districts and rural areas.
Economists explain
The inflation rate has consistently remained above 9% since March last year, owing to the lingering impacts of the coronavirus pandemic and the Russia-Ukraine war and now the disruptions in the Red Sea have led to a surge in freight charges, thereby increasing transportation costs and impacting inflation.
Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, said: “The items that have been seen import duty cuts have also witnessed a spike in prices. There is a supply shortage and imports are also lower.”
“The supply situation has not improved and the prices of basic items have remained at an elevated level,” he also added.
He also thinks the central bank's measures to curb inflation have not had an impact yet.
GDP growth in FY23
GDP growth in FY23 was one of the slowest since 2011-12, with the lowest rate of 3.42% recorded in 2019-20, because of the severe effects of the COVID-19 pandemic.
However, a provisional estimate released in May last year showed that the economy expanded by 6.03% in 2022-23, down from 7.1% in 2021-22.
Compared to the provisional numbers, the growth rate in the agriculture and industrial sectors increased in the final estimate in FY23, while it decreased in the service sector.
Data shows the service sector's growth dropped 47 basis points to 5.37% in FY23 compared to the interim estimation. It was 6.26% in FY22.
Agriculture GDP was up 76 basis points to 3.37%.
The industrial sector GDP rose 19 basis points to 8.37% in FY23. It was 9.86% in the final estimate a year ago.
The World Bank has predicted that Bangladesh's GDP growth rate will decrease in FY24. They said that the economic growth of Bangladesh may be 5.6% in this fiscal year.
Although the government has set a GDP growth target of 7.50% in FY24. The GDP growth target remained the same in the previous fiscal as well.
