POINT-to-point inflation increased for the five consecutive months in May to 5.63 per cent from 5.58 per cent in April mainly for price hike of non-food items including clothes and transportation cost. Overall non-food inflation at national, urban and rural levels increased in May. The rate of overall inflation started to rise in January and stood at 5.42 per cent after declining 12 months in a row, according to the data of Bangladesh Bureau of Statistics. The rate of inflation was 5.47 per cent in February and 5.5 per cent in March.
Neither Finance Minister nor Planning Minister however gave any explanation about increasing inflation. The BBS data showed that non-food inflation increased by 0.20 percentage points and stood at 5.84 per cent in May from that of 5.64 per cent in April. We fear there may be tremendous risks of higher inflationary pressure in the coming months due to devaluation of taka against US dollar.
If so, it would make imported essential commodities costlier. Another risk of higher inflation is that; there may be a regressive effect on lower-income families in society. It happens when prices for food and domestic utilities rise at a rapid rate. There is another problem; if interest rates on savings accounts are lower than the rate of inflation, then people who rely on interest from their savings will be poorer.
It doesn’t need to be an economist to realize that, high and unpredictable inflation is not good for business confidence because they cannot be sure of what their costs and prices are likely to be. As a result, this uncertainty could lead to a lower level of capital investment spending. In fact, a high rate of inflation is widely considered to be damaging for an economy. What’s more important is that money becomes worthless with very high inflation.
It’s a common trend that inflation occurs when an economy grows due to increased spending. However, we’re not sure what method will be applied by the central bank to keep inflation under control. Whatever the method might be; we hope it would be sustainable.
