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Inflation, according to the Bangladesh Bureau of Statistics (BBS), dropped for the second consecutive month in October though consumers continued to suffer following an unabated rise in the prices of most essentials.
The official inflation figure stood at 8.91 per cent in October, down 19 basis points from the previous month. In August last, inflation soared to its highest level of 9.52 per cent in past 11 years. Inflation is still far off the target set at 5.6 per cent in the budget for the current fiscal year.
While releasing the BBS data on inflation, Planning Minister M.A. Mannan sounded optimistic about further fall in inflation in the coming months. The minister pinned hope on better Aman production this season that, according to him, would help tame inflation to some extent.
The BBS is the only agency that generates inflation data based on the information it gathers from its field-level officials and other sources. Consumers, at times, find the BBS data not compatible with what they experience while purchasing essential commodities from the retail markets. They have little to do other than groaning in pain.
The reasons for the drop in the inflation rate in September and October have not been sufficiently explained. The central bank has not done anything, in terms of monetary policy changes, tangible that could help inflation recede. That the central bank can exercise its authority to make monetary policy independently has always remained suspect.
The BBS has identified the decline in the prices of some food items, including edible oils, as the primary reason for the marginal relaxation of inflation. But a further rise in the prices of some food items, including sugar, must have eaten up the gains. Meanwhile, the traders and refiners concerned have put forward a fresh demand for yet another hike in edible oil prices at the retail level. If the government concedes to the demand, the marginal improvement in the inflation situation---perceived or otherwise--- might see a reversal.
The BBS data, released on Tuesday last, came up with yet another positive development---hike in the national wage rate. The wage increased by 6.91 per cent in October this year over that of the same period of last year. That does not anyway help the wage earners much. The rate of wage hikes was nearly 2.0 per cent less than that of inflation during the same period, meaning that their purchasing power has gone down. It is, however, not a new development. The wage hike has been lower than the increase in the rate of inflation in recent months. So, poor and low-income people are in the midst of a difficult time. The Planning Minister's prediction about an improvement in the price situation would surely soothe their ears, but there is hardly any reason for them to be optimistic about any notable turnaround anytime soon.
The IMF has agreed to provide US$4.5 billion to Bangladesh under a 42-month arrangement. The assistance would help address the issue of the country's credit-worthiness. But, as far as dealing with major macroeconomic irritants, including inflation, is concerned, much would depend on a notable change in the ongoing external and internal developments.