Inflation impact more than official data: CAB

News Desk :
The real impact on the cost of living and the struggles of the lower middle classes are more intense than the 9 percent inflation rate calculated by the statistical agency, says Ghulam Rahman, the president of the Consumers Association of Bangladesh.

The calculations made by the Bangladesh Bureau of Statistics are based on a large basket of commodities, but lower-income people consume 20 or 25 commodities, the consumer advocate said.

“The price rise of those is much higher than the average of, say, 200 commodities. So, the actual impact on the average consumer is much higher than what is calculated by the Bureau of Statistics,” he said, reports bdnews24.com
Rahman joined Inside Out to discuss the causes of inflationary pressure and what can be done to help consumers. Video of the interview is available on bdnews24.com and its Facebook and YouTube pages.

A number of factors are contributing to the current inflation, said Rahman, who worked at the Anti-Corruption Commission and the Bangladesh Energy Regulatory Commission in his previous roles.

There are international factors which are beyond the control of the government. To counter the inflationary pressure generated abroad, the government must take some monetary measures, Rahman said. “All the world’s central banks are raising interest rates. We are not doing that here.”

“We, on the other hand, are borrowing from the central bank. The finance ministry is borrowing from the central bank. In the newspaper, I saw that it is almost Tk 700 billion. Borrowing from the central bank is actually printing money and it has a multiplier effect.”

“If too much money runs after too few goods, prices will go up.”

Another major factor is the weakening of the taka. The taka has depreciated
as much as 30 percent in a year against the dollar, which means the prices are much higher in Bangladesh than a year ago even if international prices of many commodities are now coming down, he said.

Asked why the government’s efforts to fix the prices of necessities have not worked and consumers are still being overcharged, Rahman said, “In Bangladesh, we practise a free market economy. In a free market economy, administered price is difficult unless the price decision is backed by adequate supply.”