A domino effect
Is the war between Russia and Ukraine to blame for high inflation in Bangladesh?
Due to Russia's invasion of Ukraine, the global average inflation projection for 2022 was elevated by nearly 3% in March compared to February forecasts. With a 3.3% increase over the base year, the effect on prices in Russia was the biggest in 2022. It has already surpassed all-time highs in major economies, with many more expected to do so soon.
Bangladesh's inflation increased as a result of the Russian-Ukraine conflict. If we look at the inflation rate during the last 17 months, we can see that it has already risen. Bangladesh's annual inflation rate jumped to 6.17% in February 2022, up from 5.86% the previous month, according to the Bangladesh Bureau of Statistics. Since October of 2021, food expenses have gone up to the highest inflation rate (6.2% compared to 5.6%) in January.
The most important categories in Bangladesh's consumer price index are food, non-alcoholic beverages, and cigarettes (59% of total weight), followed by gross rent, fuel, and lighting (16.9%). The index includes clothing and footwear (6.9%), transportation and communication (4.2%), leisure, amusement, educational, and cultural attractions (4.1%), other items and services (3.6%), health care and health expenses (2.8%), and decoration (2.8%).
When we compare our inflation rate to that of other countries, we can observe that India currently has a 6.07% rate, up from 6.01% previously. Japan's prior 2.5% was 1.7% more than expected. In February, China recorded a 0.9% growth rate. 6.17% already exists in our country. In comparison to other countries, this is a very high rate.
Inflation is rising in Bangladesh, as most commodities’ prices have surged on international markets due to increased demand, historically high shipping costs, and supply constraints.
As a result, with the same amount of money as in February, people could buy less in March. But now I'm thinking that people will spend the same amount of money in April as they did in March on less things.
A closer examination of the data reveals a significant increase in the price of food and fuel compared to the previous month. What does this imply?
A dozen eggs now cost more in Dhaka than in Dayton, Ohio, or Cyberjaya, Malaysia, according to the Center for Policy Dialogue. Despite Bangladeshi employees’ monthly average salaries being significantly lower than in these countries (CPD). A liter of milk in Dhaka costs more than a gallon of milk in the Czech Republic or Spain at the moment.
In Bangladesh, a litre of octane-95 gasoline costs Tk89. The global average price of gasoline during this time period is Tk114.55.
Now for the main question: is the war between Russia and Ukraine to blame for Bangladesh's inflation? The answer is a resounding “yes!” Most commodity prices are at an all-time high as a result of their conflict.
Now let's talk about why the invasion is the reason.
The war between Russia and Ukraine has affected food prices, and the ramifications will almost definitely be felt most sharply outside of Russia. Russia is the world's leading exporter of wheat. Ukraine and Russia account for around a third of all wheat shipments worldwide. Wheat prices have risen to their highest level in almost a decade. This has an impact on the pricing of wheat-based items such as bread, pasta, cereal, baked goods, and other wheat-based foods.
Corn oil and sunflower seed oil
Sunflower oil and grain prices were affected by the Russia-Ukraine conflict. Russia is a net exporter of agricultural commodities, namely wheat, corn, and soybeans, according to Hunter, putting downward pressure on prices.
Oil and gasoline
Since Russia began flashing its sabers, even before the invasion on February 24, gas prices have risen dramatically. The major component of gasoline is crude oil. And Russia is the world's largest supplier of gasoline. On February 24, the Russia-Ukraine crisis pushed US oil prices to their highest level since 2008, at well over $100 per barrel. The global price surpassed that of 2012 for the first time. And the prices are increasing day by day.
As a result of these factors, global inflation is rising, and our country's inflation rate has now reached a new high point. Bangladesh imports those items from other countries and is now paying high prices for these products because they are sold at high prices in other nations. As a result, we can say that their war is to blame for our rising inflation.
Bishal Basu is a freelance contributor.