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July 11, 2025

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FRIDAY, JULY 11, 2025
Inflation pressure may ease in a few months

Supplement

Dr Selim Raihan
01 January, 2023, 09:30 am
Last modified: 01 January, 2023, 09:33 am

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Inflation pressure may ease in a few months

Dr Selim Raihan
01 January, 2023, 09:30 am
Last modified: 01 January, 2023, 09:33 am
Selim Raihan, executive director, Sanem. Photo: Collected
Selim Raihan, executive director, Sanem. Photo: Collected

The pressure of imported inflation is likely to ease slightly in the future as the prices of many commodities in the world have become somewhat stable after reaching their peak. Again, there is a possibility that the prices of several products will fall due to a decrease in demand amid an economic downturn and the prices of some products have already started to fall in the international market.

Crude prices in the international market have been falling ever since the increase in domestic prices in August this year. In December, the prices of the commodity fell close to the previous year's level. Over the past two-three months, the prices of many products have dropped.

This is a positive sign that there is a possibility of getting relief from the global inflation pressure in the next few months. But there is also uncertainty. This is because if the war situation between Russia and Ukraine deteriorates for any reason, there will be various types of disruptions on the supply side. As a result, prices of all products may increase again.

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But a big problem that we have in our country is if the price of a product falls in the international market, it does not have any immediate effect on the domestic market. Once the price of a product has gone up, traders never want to bring it down again. They provide the excuse that the cost has gone up due to various reasons.

If the price of a product increases in the global market, it increases in the domestic market immediately. But in the case of a fall in prices in the global market, there is no guarantee that the domestic market will cool down. Nonetheless, a fall in the prices of goods in the world market creates a sense of calmness in the country.

If prices of fuel oil are not reduced in the domestic market, it will be very difficult to reduce the inflation pressure in the future. This is because oil prices are correlated with electricity prices and the production costs of other industrial and agricultural products.

If oil prices are reduced, expenditure in various sectors including irrigation, and transportation will come down to some extent. As a result, inflation will ease.

Agricultural production can play a major role in reducing inflationary pressure in the future. If there is a good harvest in the next two seasons, food prices will cool down a little.

But the biggest problem is that there is a high level of market imperfection in our country. Taking advantage of temporary supply shortages, sellers manipulate prices through hoarding and syndication.

No strong effective initiatives are seen on the part of the government to control all these crimes. Hence, consumers suffer due to the price volatility of different products at different times. These issues need to be monitored. And if this is done, the inflationary pressure will be reduced a lot in the future.

The inflation rate in the past few months has been the highest in more than a decade. It is a completely new experience for the people and policymakers in the country. Many people could cope with the inflation caused by the Ukraine-Russia war as they were yet to recover from the wounds of job losses and reduced incomes due to Covid.

However, many of the initiatives that are being taken to deal with inflation have stood in the way of GDP growth and a rise in people's income.

Interest rates in the banking system have been capped between 6%-9% for a long time. The restrictions should be withdrawn to control the flow of money.

Imports of certain products are being discouraged to maintain the exchange rate and reserve position at a certain level. In doing so, some hindrances may have been created in the import of industrial raw materials and capital equipment.

Now, to reduce inflation, no initiative can be taken that can reduce investment, production, employment, income, and economic activity.

In this situation, as emphasis should be given to the manufacturing sector to reduce inflation. At the same time, the coverage of social security for the poor and lower middle class should be increased to deal with the pressure of inflation.


TBS Senior Correspondent Jahidul Islam talked with Dr Selim Raihan  

Economy / Top News / Inflation

Bangladesh / Economy / inflation

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