Dhaka, June 5 (EFE).- Bangladesh’s inflation hit a decade-high of 9.94 percent in May amid price hikes in food and non-food items, in a fresh indication of the country’s growing economic woes, officials said on Monday.
The monthly inflation in May was the highest in recent months, surpassing 9.52 percent in August 2022, according to the Bangladesh Bureau of Statistics.
The last time Bangladesh witnessed a double-digit inflation rate was in 2011, when the country recorded 10.92 percent inflation, the government agency said.
The monthly update showed that prices of both food and non-food items increased further in the past month, with food inflation jumping to 9.24 percent in May from 8.84 percent in April.
Non-food inflation increased to 9.97 percent from 9.72 percent in April.
The data was released just days after Finance Minister Mustafa Kamal had hoped to keeping inflation at 6 percent, announcing the national budget for the fiscal year starting in July.
Economists, however, dismissed the projection as unrealistic, saying the country was now in a “vicious cycle” due to a fall in multiple economic indicators, including foreign exchange reserves.
“People are suffering because the inflation rate is higher than wage growth. It is raising the cost of living,” said Rashed Al Mahmud Titumir, who teaches economics at Dhaka University.
“The presence of hyper-money in the economy, high bank borrowing by the government, and a fast declining foreign exchange reserve have put the country in a vicious cycle, and the government is unable to give people any relief,” he said.
In May, Bangladesh’s foreign exchange reserves also fell to a seven year low of $29.83 billion after a payment of import bills worth $1.18 billion to the Asian Clearing Union.
The last time Bangladesh’s foreign exchange reserves were less than $30 billion was during the 2014–15 financial year, when the country’s central bank reported a reserve of $25.02 billion, according to the central bank.
The country’s foreign exchange reserves grew steadily for several years to reach a record $48.06 billion in August 2021 on the back of robust economic growth before declining amid the Covid-19 pandemic and Russia’s war on Ukraine.
The authorities shut down the country’s largest power station in southern Bangladesh Monday as it could not import coal due to a dollar shortage, aggravating the already acute power crisis and increasing public suffering.
Overwhelmingly import-dependent Bangladesh has battled a dollar crisis despite the International Monetary Fund’s approval of a loan package of $4.7 billion earlier this year. EFE