Inflation slows in Jan, still higher than expected
January's inflation rate grew higher than the wage growth rate, meaning that the cost of living is increasing faster than people's wages, a development that indicates the purchasing power of the people is on the decline.
According to Bangladesh Bureau of Statistics (BBS) data released on Monday, inflation in Bangladesh decreased to 8.57% in January from 8.71% in December.
Yet, the inflation rate was higher than the wage growth of 7.06%, which can lead to a reduction in consumer spending and a decrease in economic activity, as people are forced to cut back on spending.
However, the wage growth in the production sector was higher at 9.31%, compared to the inflation rate.
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State Minister for Planning Shamsul Alam said that the rate of inflation has been decreasing since September last year. Despite a marginal reduction in the inflation rate, the wage rate rises.
It indicates that the demand for labours is increasing thanks to continuing economic activities.
"Our export earnings increased by about $2 billion in the first six months of the current fiscal year compared to the same period in the previous fiscal year," the minister said, and he termed it an indicator of stable economic activities.
He said that the inflation rate is calculated using the average price of a large number of commodities and services. But the government is raising the price of some products and services gradually, considering the adjustment capacity of the people.
When the price of a product rises, it takes a long time to fall in almost all countries around the world. The rate at which the price rises never matches the rate at which the price falls.
As such, it will take a long time for Bangladesh to drop commodity prices further.
Overall, the decrease in the inflation rate and the food and non-food item price indices is a positive development for the economy of Bangladesh.
It indicates stability and improvement in economic conditions, which is beneficial for the country's low- and fixed-income people and growth and development as well.
The overall inflation rate reached its highest point in a decade in August last year, at 9.52%. However, the rate has steadily decreased over the past few months, reaching 8.91% in October and continuing to drop in the following months.
In January, the food price index dropped to 7.76% from 7.91% in December, while the price index for non-food items fell to 9.84% from 9.96% during the same period.
The overall inflation rate in rural areas declined to 8.67% in January from 8.86% in December, with food prices dropping to 7.92% from 8.11% and non-food items to 10.12% from 10.29%.
In urban areas, the overall inflation rate dropped to 8.39% in January from 8.43% in the previous month. The food price index dropped to 7.41% from 7.45% during the same period, while the non-food item price index dropped to 9.48% from 9.51%.
