'Market management failure a key factor for higher inflation'

The government's failure in market management has been one of the key factors behind the elevated level of inflation for one and a half years, said Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue (CPD).  

Inflation in Bangladesh rose to 9.93 percent in October on the back of both food and non-food prices.

Food inflation, which is a major reason for the elevated inflation, stayed above 12 percent for the third straight month. It was 12.56 percent in October. Non-food inflation advanced 48 basis points to 8.3 percent.

Rahman said the agriculture ministry regularly publishes the production cost of 15 products. It shows that the price of products goes up by as low as four times to as high as 15 times. 

"The monopoly market system does not exist anywhere in the world."

Rahman says he does not see any exercise aimed at assessing the exact production, demand and import requirements of products.

"Evidence-based policy-making is missing in Bangladesh. Our policy is sixth sense-based to a large extent." 

The significant depreciation of the taka against the dollar and the reduced imports have also hit the supply system, said the former professor of the University of Dhaka. 

The taka has lost its value by nearly 30 percent against the US dollar since January last year, making imports costlier, central bank data showed.

Amid a 25 percent drop in the foreign exchange reserve over an 18-month period, the central bank has initiated measures to discourage non-essential and luxury imports.

"Owing to higher inflation, the cost of living has gone up. The impact has been particularly severe on the low- and fixed-income groups," Prof Rahman said.

He suggested restoring macroeconomic stability as quickly as possible and expanding the coverage of social safety nets.