Inflation drops owing to low consumption amid pandemic

Bangladesh began FY21 with a drop in inflation and a researcher believes low consumption due to the coronavirus pandemic pushed the key indicator down.

Point-to-point general inflation fell to 5.53 percent in July from 6.02 percent in June. The rate was 5.62 percent in July last year.

Latest data from the Bangladesh Bureau of Statistics showed a slump in food inflation – to 5.7 percent in July from 6.54 percent in June – contributed to the fall in general inflation.

Non-food inflation rose slightly to 5.28 percent from 5.22 percent.

The government failed to keep inflation below the target of 5.5 percent in FY20 that ended on June 30. Average inflation was 5.65 percent that financial year.

The government wants to keep inflation below 5.4 percent this fiscal year.

“People are buying fewer goods because their income and purchase power have dropped due to COVID-19. A drop in trading might have caused the downward trend in inflation,” said Ahsan H Mansur, the executive director at Policy Research Institute.

Inflation was 5.43 percent in the rural areas in July while 5.72 percent in urban areas.