In September the rate of
inflation in Bangladesh was 6.24 per cent. It was 6.17 per cent in the previous month. Inflation is thus seen to be creeping up now. But it was well above 7 per cent some years ago. Let us hope we will not have to revisit that trend with firmer controls
Worry about rising inflation
It is worrying that while many countries are witnessing significant reductions in their overall rate of inflation, in Bangladesh it is actually increasing. In September the rate of inflation in Bangladesh was 6.24 per cent. It was 6.17 per cent in the previous month. Inflation is thus seen to be creeping up now. But it was well above 7 per cent some years ago. Let us hope we will not have to revisit that trend with firmer controls. Not to mention US and China, even in India, it is now below four per cent. Increase in inflation, thus, does not bode well for our growing economy which aspires to become a middle income nation within a short time.
Exploring the reasons for the rising inflation, we can first mention about the price of oil on the international market. Though price of crude oil has come down to below $40 per barrel internationally and many countries have reduced oil price on their domestic markets accordingly to stimulate economic growth, Bangladeshs relevant authorities dubiously have kept oil prices unchangingly on the higher side.
Besides, rather questionably the government has increased the price of gas. Therefore, when other countries are reaping benefit from reduction in oil prices or fuel prices, cost of industrial production here is still high. Take for example the gain of India that has lowered oil prices internally matching its price in the international market. The increased gas price in Bangladesh has also an impact on the commodity prices. Added to this is the effect of the pay rise of public servants. This time around the rise is greater than any other time in the past. Such policies can only feed inflation, not control or reverse it.
The rainy season is no more, but the prices of daily essentials on the market are still unusually high. The high price trends of daily essentials in the markets now are obviously due to the impact of the public servants unprecedented pay rise.
According to statistics in December 2007 inflation was 11.59 per cent. If the government does not take right measures to reduce inflation now, it may again move to reach such a double digit. Against this backdrop, it is now indispensable to reduce the oil price and stabilise the domestic market. Government must also go for stronger market monitoring in relation to imported products --apart from oil -- the prices of which dropped in international markets but did not decrease in our local markets. In sum, governments policies against inflation must also include steps against profiteering and related factors.
