Inflation won’t rise significantly despite the increase in fuel prices: Commerce minister

Commerce Minister Khandaker Abdul Muktadir on Monday expressed hope that inflation will not rise significantly despite the increase in fuel prices.

The minister presented this explanation in parliament, stating that “it is important to understand why inflation will not increase in that way.”

He made these remarks while responding to a supplementary question from independent Member of Parliament Rumeen Farhana during the question-and-answer session in the National Parliament. The session was presided over by Deputy Speaker Kaiser Kamal.

In response, the commerce minister said, “First of all, it is important to understand why inflation will not increase significantly. Compared to the ratio at which global fuel prices have increased, the rise in Bangladesh has been quite modest”

 “In the United States, fuel prices vary from state to state due to each state's own tax systems. Before this war began, prices in many states were around $2.70–$2.80 per gallon (about 4.5 litres), which have now exceeded $5 in various states,” he added.

 “If you compare with neighbouring countries or economies similar to Bangladesh, you will see that fuel prices have increased significantly everywhere. In many countries, fuel price adjustments are automated—meaning they are triggered automatically without requiring separate government intervention,” the minister said.

Regarding the domestic fuel price hike, he said: “In our case, diesel has increased from 100 taka to 115 taka—an increase of 15 per cent. To explain, in an industrial factory, fuel typically accounts for 7–8 per cent of the cost of production, depending on the manufacturing sector. If we consider that 7–8 percent as 100 per cent, then a 15 per cent increase has occurred within that component.”

Explaining the impact on transportation, he added: “If you consider transportation, a bus running 200 kilometres uses roughly 25–30 litres of diesel. For 30 litres, the cost has increased by about 450 taka. If that same 30 litres is used to transport goods by truck, the impact of that cost is spread over about 10,000 kilograms of goods. So while it may seem that fuel price increases will drive inflation, when calculated per unit of transported goods, the impact is not significant enough to trigger major inflation. Also, you cannot take the economy to a point where fundamental balance becomes imbalanced. That is why all countries have adopted similar policies, and we have followed them modestly with a moderate price adjustment.”

Due to the Iran-related conflict, a global fuel crisis has emerged, affecting Bangladesh as well. To tackle this crisis, the government has taken initiatives to import fuel from countries including India and Russia, the Commerce Minister informed the Parliament.

He said, “To address the fuel crisis, the government has taken initiatives to import fuel from countries such as India and Russia. At the same time, imports of essential commodities have been increased to maintain normal supply.”

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