Electricity and Fuel Price Shock Pushes Inflation to 8.34 Percent
Graphics: Agamir Somoy
Driven by higher electricity and fuel prices, inflation in Bangladesh has begun to rise again. Overall inflation in the country climbed to 8.34 percent in September, up from 8.26 percent in August. During this period, food inflation rose to 7.22 percent, compared to 7.02 percent in August.
However, non-food inflation edged down slightly to 9.30 percent, compared to 9.32 percent in the previous month.
Meanwhile, wage growth slowed in September, leaving ordinary citizens facing a double strain: while the cost of living went up, the rate of income growth slowed down. These findings were published yesterday, Wednesday, in the Consumer Price Index (CPI) report by the Bangladesh Bureau of Statistics (BBS).
Dr. Zahid Hussain, former lead economist at the World Bank’s Dhaka office, told Agamir Somoy that the government must take two types of measures during this period of rising inflation: monetary policy through the central bank and fiscal policy. "Seeing signs of easing inflation over the past three months, Bangladesh Bank initiated steps to loosen monetary policy," he noted. "However, the inflation situation in September serves as a warning. The downward trend in inflation was not permanent, and prices are creeping back up. The same pattern is visible across both rural and urban areas. Prices for daily non-food necessities have risen alongside food products. Therefore, the conditions are not yet ripe for policymakers to consider easing monetary policy."
He further added, "The electricity rate hike took effect in June, and its full impact has now trickled through. The fuel price increases late in September will show their full impact in October. The government must ensure that budget management remains tight under these circumstances. Additionally, management of ongoing government support programs must be improved to ensure that assistance reaches those who truly qualify for it."
Sources report that after staying above 9 percent for three consecutive months, inflation had eased in July and August. Experts attribute the recent price hikes across goods and services to increased costs in production, transportation, and other sectors following the earlier electricity hike and September's fuel price increase. Consequently, middle-income households, alongside low-income groups, are feeling the pinch of higher expenses.
According to the BBS, rural inflation also ticked upward. In September, general inflation in rural areas reached 8.38 percent, up from 8.31 percent in August. Rural food inflation rose to 7.18 percent from 7.01 percent. However, non-food inflation in rural regions fell slightly to 9.57 percent from 9.59 percent.
In urban areas, general inflation stood at 8.26 percent in September, up from 8.20 percent in August. Urban food inflation increased from 7.04 percent to 7.25 percent over the same period, while non-food inflation dipped slightly to 8.94 percent from 8.97 percent.
Despite rising inflation, wage growth decelerated. According to the BBS Wage Rate Index, the general national wage growth rate was 7.90 percent in September, down from 8.05 percent in August.
In September, wage growth in the agricultural sector fell to 7.89 percent from 8.07 percent in August. Industrial wage growth held steady at 7.86 percent, while wage growth in the service sector dropped to 8.07 percent from 8.25 percent in the previous month.
The BBS stated that these statistics were compiled by analyzing data gathered from 143 local markets across all 64 districts in the country.
