The overall inflation in Bangladesh slid 19 basis points to 9.67 percent in February thanks to a fall in the prices of both food and non-food items, according to sources at the planning ministry.

The Consumer Price Index (CPI) grew 9.86 percent in January. The Bangladesh Bureau of Statistics has not published the inflation data for February yet.

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Inflation edges up despite monetary tightening. Why?

Despite the drop, consumer prices have stayed above the government's target for the current financial year, which ends in June.

Food inflation dipped 12 basis points to 9.44 percent. It was 9.56 percent in January. Similarly, non-food inflation declined nine basis points to 9.33 percent.

The government has targeted to limit the average inflation to 7.5 percent in 2023-24. The CPI surged to a 12-year high of 9.02 percent in the previous financial year, both for external and internal factors.

"Although inflation went down in February, it is persisting at a higher level," said Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development.

In rural areas, general inflation stood at 9.48 percent in February, down from 9.70 percent while urban inflation slowed to 9.88 percent from 9.99 percent.

In Bangladesh, the inflation surge was initially triggered by supply chain disruptions due to the Covid-19 pandemic and the Russia-Ukraine conflict.

In 2022, while global commodity prices started to decline, the significant deficits in Bangladesh's current account balance and overall balance of payments led to a sizeable depreciation of the taka.

In the past two years, the currency has lost its value by about 25 percent owing largely to a 30 percent decline in the foreign currency reserves.

The pass-through of a sharp depreciation of the local currency accounted for half of the inflation surge in FY23, according to the International Monetary Fund.

The depreciation raised import prices, contributing to inflationary pressures. Additionally, second-round effects from adjustments in energy prices and imperfections in the commodity market further compounded high inflation, said the Bangladesh Bank in January.

The central bank has embarked on a tighter monetary policy to curb higher prices.

Besides, Mujeri said, the government has taken some corrective measures like conducting drives in the market to stop illegal hoarding and price gouging.

"But the moves have not proven to be adequate yet."

"Only some raids will not help rein in inflation. We will have to ensure smooth supply in the market."

The former chief economist of the central bank also thinks only the monetary policy would not be able to contain inflation successfully.

He underscored bringing in structural changes to the market management system and identifying weaknesses and addressing them.