Inflation rises as shutdown rips supply chain
Inflation rose by 0.12 percentage point to 7.15 percent in November, compared to the previous month, mainly due to a supply chain disruption amid political violence and shutdowns.
Economists warned the rate will go up further if shutdowns and blockades continue.
But officials at Bangladesh Bureau of Statistics said inflation did not go up much despite political unrest and will remain contained in future.
Food inflation increased by 0.17 percentage point and stood at 8.55 percent in November, while non-food inflation rose by 0.04 percentage point to reach 5.08 percent, according to BBS.
The uptick in inflation is mainly driven by rising food prices probably caused by supply chain disruptions, Hassan Zaman, chief economist of Bangladesh Bank, said.
He said, “Safety nets which cushion the impact on the poor such as the Open Market Sales of subsidised rice may need to be scaled up if this continues.”
Zahid Hussain, lead economist of the World Bank in Dhaka, said, as import commodities could not be transported properly from land and sea ports due to shutdowns and blockades, inflation rose more in rural areas compared to urban areas.
Hussain also said, despite a slow credit growth and stable exchange rate, non-food inflation rose due to supply chain disruptions and an increase in the cost of commodities.
According to the BBS, overall inflation in rural areas increased by 0.14 percentage point in November, compared to that in October, but in urban areas it increased by 0.06 percentage point.
Hussain said, if the political unrest continues, it would be difficult to keep the commodity prices in control and the cost-push inflation will continue to go up.
Inflation went up slightly due to the political unrest but it did not rise as much as was apprehended, BBS Director General Golam Mostafa Kamal said while releasing the data yesterday.
A high official of the cabinet division said the government is taking steps to keep the supply chain intact amid blockades. A cabinet committee meeting on law and order situation also discussed the issue on Wednesday, the official said.
Officials of the law enforcing agencies told the meeting that they have taken steps to ensure uninterrupted movement of commodity-laden vehicles during blockades. BBS Director Abul Kalam Azad said shutdowns and blockades have various effects on the commodity market. "In many rural areas, farmers could not sell their crops and those got damaged in the field due to a lack of transportation," he said.