Bangladesh's inflation hits a 27-month low at 9.05% in May

In the month of May, spending on food purchases has increased slightly in urban areas while it has decreased in rural areas.

The government has also reported a “drop” in expenditure in non-food sectors in both urban and rural areas. As a result, the country’s overall inflation has declined, reaching the lowest level in 27 months.

The last time the rate was lower than this was in February 2023, at 8.87 percent.

According to updated figures released on Monday by the Bangladesh Bureau of Statistics (BBS), the inflation rate in May fell to 9.05 percent compared with the same period last year.

The rate was 9.89 percent in May last year. In April this year, it stood at 9.17 percent.

A 9.05 percent inflation rate means goods or services that cost Tk 100 in April last year now cost Tk 109.05.

The caretaker government also reported a significant fall in overall inflation in February this year, but back then the decline was solely in the food sector.

Since February 2023, the rate has been rising and hasn’t dropped below 9 percent thereafter. In July 2024, a month of mass protests, it peaked at 11.66 percent.

In January of this year, the inflation rate dipped to a single-digit figure, at 9.94 percent; it dropped further to 9.32 percent in February.

After a slight increase in March, it decreased again in April, and that trend continued into May.

Analysis shows that in April, food inflation was 8.63 percent, which dropped further to 8.59 percent in May.

In the non-food sector, inflation fell to 9.42 percent in May, down from 9.61 percent in April.

According to BBS data, food costs in urban areas in May increased slightly compared with April. The rate stood at 9.29 percent in May, up from 9.13 percent in April.

On the other hand, food inflation in rural areas decreased. In May, it was 8.30 percent, down from 8.40 percent in April.

Inflation in the non-food sector declined in both rural and urban areas.

In rural areas, non-food inflation eased from 9.86 percent in April to 9.75 percent in May. In urban areas, it dipped from 9.88 percent in April to 9.63 percent in May.

The interim government took the reins of the country following the ouster of the Awami League government on Aug 5 last year in the wake of a mass uprising spearheaded by students. Immediately after taking over, Chief Advisor Muhammad Yunus announced measures to tame inflation.

To curb the money supply, interest rates have been raised repeatedly. This has reduced money demand, and for the past five months, government statistics have reflected this downward trend in inflation.

However, these efforts have yet to yield significant benefits in the markets for essential goods.

In the most recent budget announced on Monday, the government has set a target to bring inflation down to 6.5 percent by the end of the next fiscal year.