TDS Desk:

Reducing inflation was a major success in the first month of the Interim Government’s assumption of office by changing the political landscape in Bangladesh. Food inflation was the biggest contributor to the decline in overall inflation in August. Food price inflation declined by nearly 3 percent and stood at 11.36 percent more than the previous month. Analysts believe that the “normalization of the law and order situation” and “the end of extortion” have played a major role in reducing food price inflation in the span of a month.
The Bangladesh Bureau of Statistics (BBS) informed that inflation has been curbed in less than 25 days since the current government took office.
The latest BBS report shows that general inflation eased to 10.49 percent in August compared to 11.66 percent in July. Food inflation eased by 2.74 percent, standing at 11.36 percent from 14.1 percent the previous month.
However, despite the decline in general and food inflation, non-food inflation has slightly increased. It has increased from 9.68 percent in July to 9.74 percent. At that time, all types of inflation rates were higher in villages than in cities.
About the drop in inflation in a month, Bangladesh Bank (BB) Governor Dr. Ahsan H. Mansur told , “It is not yet confirmed that inflation has come down. Besides, there is no guarantee that it will not grow. The countrymen have to wait for three to four months. We are observing the entire situation.”
“It is good news that inflation has come down. However, inflation above 10 is also comparatively high.”
Zahid Hossain, the former chief economist of the World Bank Dhaka Office, believes that the supply system was interrupted due to the effect of the July curfew, agitation, and abnormal law and order situation.
He told that the country’s economy went through a crisis in July. The situation in the market was very bad at that time. The economy “improved slightly” in August. Extortion was off for the first two weeks, but now I am hearing that it is coming back. As extortion has stopped, the rate of increase in food prices has come down. As a result, the price inflation has decreased in August than in July.
Regarding the steps to be taken to bring inflation below 10, he said, “There are three steps to be taken to reduce inflation — first, contractionary monetary policy, second, an increase in dollar supply – an increase in dollar supply will not affect the import of goods, and lastly, improving the market system. Extortion in the market should be stopped.
Analysts say that although the rate of inflation has decreased, the prices of commodities have not reduced. Inflation is still in “double digits”. Extortion and manipulation in the market should be controlled to bring it down to the minus levels. Along with this, it is feared that there is a systematic error in BBS showing the reduction in food inflation – even though the prices of daily commodities did not decrease. Changes in the food basket can also have an impact on reducing inflation. They are also talking about reforming this government organization by bringing forward the weakness of the statistics.
Mustafa Mujeri, former director general (DG) of Bangladesh Institute of Development Research (BIDS) and former chief economist of Bangladesh Bank, said, “Biases are created in the statistics due to methodological problems. For example, we are taking the lowest average rate for different product prices. Changes in the food basket can also have an impact on keeping inflation down. “We can’t measure inflation accurately yet. Statistical weaknesses should be addressed,” he mentioned.
“The sooner these can be removed, the better for the reform process. Statistics will also be realistic. However, it cannot be said that inflation is decreasing by looking at one month’s data, we have to see another two-one months.”
Trading Corporation of Bangladesh (TCB) data informs that coarse rice was priced at Tk 52-55 per kg in the market on August 31. Although at the beginning of the month, it was Tk 50-54 per kg. Similarly, the price of medium and fine rice also increased by Tk 2-3 per kg. At the beginning of last month, chicken eggs were sold at Tk 48-52, but at the end of the month, they hiked to Tk 50-53. At the same time, the price of raw fish also increased from Tk 300-400 to Tk 350-400 taka. ‘
Traders initially blamed supply shortages and floods for the rise in prices. However, market analysts and retailers blame “manipulation by rice traders”. But at that time the price of all kinds of vegetables reduced a little as there was no extortion on the streets.
According to government estimates, rice production in the last Aman season was around 1.74 lakh tonnes, which is more than any previous year. Besides, the last Boro season also produced record rice production. Despite the target of 2.22 lakh tons, the production is 2.24 lakh tons.
The calculations of the Ministry of Food show that the amount of food stock in the country till September 5 was 19,70,779 tons. Of this, rice was 14,64,234 tons. About a month ago on August 7, the stock of rice was 12,97,474 tons. That is, the stock has increased by more than one and a half million tons. However, despite the increase in stock, the price of rice in the retail market is increasing at this time.
The overall inflation in the country has been showing an upward trend for two years. Last July, the Awami League government was ousted with the highest inflation in a decade and a half. However, the Sheikh Hasina government recently used an “interest rate hike” as the main weapon to curb inflation. However, it did not succeed, instead, increased. The current government also sees inflation control as one of its main goals. So, the interest rate has been increased again. However, stakeholders do not see any major steps in market management.
Professor Dr. MM Akash of the economics department at Dhaka University (DU) said, “The trend of inflation can’t be understood in the change of commodity prices in a short period of time. If the price of rice has increased, then has the product’s weight been calculated as inflation? And if that happens, it will be a trick.”