Inflation
Cost of living in Dhaka increased by 11.08 percent in 2022: CAB
The Consumers Association of Bangladesh (CAB) said that the cost of living in the capital Dhaka increased by 11.08 percent in 2022.
The report released on Saturday said that around 17 products have directly contributed to the rise in inflation as well as the cost of living last year.
The urban lower-income group of people has compromised their diet chart and lifestyle due to the increase in the prices of essential commodities, fish and meat.
The report was presented on behalf of CAB by Mahfuz Kabir, research director of the Bangladesh Institute of International and Strategic Studies (BIISS).
Read More: Inflation report could show another month of cooling prices
According to the report, the cost of living in the capital increased by 6.88 percent in 2020 and 6.5 percent in 2019.
Dr Kabir has prepared the result, which was collected from 11 markets across Dhaka (Dhaka North and South City Corporation). It has covered 141 food items, 49 non-food items and 25 services.
Rice, flour, pulses, bakery products, sugar, fish, eggs, domestic poultry, edible oil, imported fruits, tea and coffee, local and imported milk, washing and personal hygiene items, and transport costs are included in the CAB price monitoring.
The CAB has proposed policy recommendations in the analysis of inflation trends. In the recommendations, the association said the government has increased support under subsidised food aid and social protection to reduce inflationary pressure on the poor and disadvantaged.
But the government should extend social protection schemes in urban areas to protect low and middle-income consumers from rising inflationary pressures.
Read more: Keep essentials' prices within reach: CAB
The government has significantly increased OMS activities during Covid-19, which has been extended further in 2022 to protect these consumer groups from the economic slowdown and inflationary woes.
But there is an inadequacy of food supply through OMS against extremely high demand and a lack of proper monitoring to ensure equitable distribution of OMS food products among low-income people.
The CAB recommendation has also opposed the decision to increase gas and fuel oil prices at the retail level as the bulk price hike of gas and oil would affect lower-income people.
CAB President Golam Rahman. Vice President SM Najer Hossain, General Secretary Advocate Humayun Kabir Bhuiyan, joint secretary Dr. Md. Shahnewaz Chowdhury, and Md. Qazi Abdul Hannan were also present at the press conference held virtually.
Read more: CAB urges govt to readjust edible oil prices
Inflation report could show another month of cooling prices
The U.S. inflation report for December being released Thursday morning could provide another welcome sign that the worst bout of spiking prices in four decades is slowly weakening.
Or it could suggest that inflation remains persistent enough to require tougher action by the Federal Reserve.
Most economists foresee the more optimistic scenario: They think December marked another month in which inflation, though still uncomfortably high, continued to cool. According to a survey by the data provider FactSet, analysts have predicted that consumer prices rose 6.5% in December compared with a year earlier. That would be down from 7.1% in November and well below a 40-year high of 9.1% in June.
On a month-to-month basis, the economists think prices were flat in December. Even more significant, a closely watched gauge of “core” prices — which excludes volatile energy and food costs — is expected to have risen just 0.3% from November to December and 5.7% from a year earlier. The Fed closely tracks core prices, which it sees as a more accurate indicator of future inflation, in setting its interest rate policies.
Another modest rise in core prices would increase the likelihood that the Fed would raise its benchmark rate by just a quarter-point, rather than a half-point, when its next meeting ends Feb. 1.
For now, inflation is falling, with the national average price of a gallon of gas declining from a $5 a gallon peak in June to $3.27 a gallon as of Wednesday, according to AAA.
Supply chain snarls that previously inflated the cost of goods have largely unraveled. Consumers have also shifted much of their spending away from physical goods and instead toward services, such as travel and entertainment. As a result, the cost of goods, including used cars, furniture and clothing, has dropped for two straight months.
Economists will pay particular attention Thursday to the prices of services, which are seen as a stickier component of inflation. They reflect rising wages among labor-intensive businesses such as restaurants, hotels and health care companies.
If the data show only a small increase in services costs, that would likely strengthen hopes that the economy can avoid recession and instead experience a “soft landing." Such a scenario would mean slow growth and likely a small rise in unemployment but much less economic pain than a full-fledged recession.
Read more: Europe's inflation slows again but cost of living still high
Indeed, last week's jobs report bolstered the possibility that recession could be avoided. Even after the Fed's seven rate hikes last year and with inflation still high, employers added a solid 223,000 jobs in December, and the unemployment rate fell to 3.5%, matching the lowest level in 53 years.
At the same time, average hourly pay growth slowed, which should lessen pressure on companies to raise prices to cover their higher labor costs.
“The soft landing narrative has gained some credibility this year, and that has also led to a stock market rally," said Michael Arone, chief investment strategist at State Street Global Advisors.
Another positive sign for the Fed's efforts to quell inflation is that Americans overall expect price increases to decline over the next few years. That is important because so-called “inflation expectations” can be self-fulfilling: If people expect prices to keep rising sharply, they will typically take steps, like demanding higher pay, that can perpetuate high inflation.
On Monday, the Federal Reserve Bank of New York said that consumers now anticipate inflation of 5% over the next year. That's the lowest such expectation in nearly 18 months. Over the next five years, consumers expect inflation to average 2.4%, only barely above the Fed's 2% target.
Still, in their remarks in recent weeks, Fed officials have underscored their intent to raise their benchmark short-term rate by an additional three-quarters of a point in the coming months to just above 5%. Such increases would come on top of seven hikes last year, which caused mortgage rates to nearly double and made auto loans and business borrowing more expensive.
Futures prices show that investors expect the central bank to be less aggressive, and implement just two quarter-point hikes by March, leaving the Fed's rate just below 5%. Investors also project the Fed will cut rates in November and December, according to the CME FedWatch Tool.
Fed Chair Jerome Powell has sought to push back against that expectation of fewer hikes this spring and cuts by the end of the year, which can make the Fed's job harder if investors bid up stock prices and lower bond yields. Both trends can support faster economic growth just when the Fed is trying to cool it down.
The minutes from the Fed's December meeting noted that none of the 19 policymakers foresee rate cuts this year.
Read more: Wall Street braces for earnings to get hit by inflation
Still, last week James Bullard, president of the Federal Reserve Bank of St. Louis, expressed some optimism that this year, “actual inflation will likely follow inflation expectations to a lower level," suggesting 2023 could be a “year of disinflation.”
WB cuts Bangladesh growth target by 0.9 percent to 5.2 percent
The World Bank on Wednesday cut Bangladesh's economic growth (gross domestic product -GDP) forecast for the 2022-23 fiscal year further by 0.9 percent to 5.2 percent, due to a combination of factors including elevated inflation, energy shortages and tightening of the monetary policy.
The GDP growth has been predicted in the World Bank's 'Global Economic Prospects report released on Tuesday night.
The forecast is down from 7.2 percent growth in the previous year.
The government has set a target of 7.5 percent GDP growth in the current financial year.
The World Bank said that the growth of Bangladesh may increase slightly to 6.2 percent in the next financial year.
Read more: Bangladesh wants low-interest loan from World Bank amid economic woes
According to the report, the economy of Bangladesh is being affected due to the global context. “Bangladesh’s economy is affected by the global situation and the sharp increase in fuel prices in the international market,” it said.
As a result, there has been a disruption in power supply to industries and households. Industrial production has been disrupted. The government had to do load-shedding to deal with the situation. Apart from this, buying of cars has been stopped as well as luxury goods have been discouraged, the World Bank report said.
Earlier, the Asian Development Bank (ADB) predicted a 6.6 percent GDP growth in Bangladesh in the current fiscal year. The ADB's growth forecast was based largely on a slowdown in domestic consumption demand, a decline in exports and remittances, and a slowdown in the global economy.
Read more: Bangladesh wants open, transparent relationship with World Bank: PM
Europe’s inflation slows again but cost of living still high
Europe ended a bad year for inflation with some relief as price gains eased again. While the cost of living is still painfully high, the slowdown is a sign that the worst might be over for weary consumers.
The consumer price index for the 19 countries that used the euro currency rose 9.2% in December from a year earlier, the slowest pace since August, the European Union statistics agency Eurostat said Friday. Croatia joined the eurozone on Jan. 1.
It was the second straight decline in inflation since June 2021. In November, the rate dipped to 10.1% after peaking at a record 10.6% in the previous month.
Households and businesses across Europe have been plagued by surging energy costs since Russia launched its war in Ukraine in February, which played havoc with oil and natural gas markets and have been the main driver of inflation.
The latest numbers indicate that the energy crisis may be easing for now. Energy price rises slowed to 25.7%, down from 34.9% in November and 41.5% in October.
Natural gas prices have slipped from all-time highs this summer as Europe has largely filled its storage for winter with supplies from other countries while warmer-than-usual weather has reduced fears of a shortage during the heating season.
Food price gains, the other big factor that’s been driving up European inflation, held fairly steady. Prices for food, alcohol and tobacco rose at a 13.8% annual pace in December, a smidgen higher than the month before.
Inflation also has been worsened by bottlenecks in supplies of raw materials and parts amid rebounding global consumer demand after COVID-19 pandemic restrictions ended.
“It is likely that the peak in inflation is behind us now, but far more relevant for the economy and policymakers is whether inflation will structurally trend back to 2% from here on,” said Bert Colijn, senior eurozone economist at ING Bank.
So-called core inflation, which excludes volatile food and energy costs, climbed to 5.2% last month from November’s 5%, as prices rose for both services and goods such as clothing, appliances, cars and computers. Colijn and other economists said that means European Central Bank officials will likely roll out more interest rate hikes to get inflation back to their 2% target.
Soaring costs for energy and food have threatened a recession and fed labor unrest as wages fail to keep pace with the price rises. Across Europe, subway staff, hospital workers, train drivers, postal workers and air traffic controllers have gone on strike, threatening political turmoil.
In a sign that energy costs remain a worry for political leaders, French President Emmanuel Macron on Thursday urged energy suppliers to renegotiate what he called “abusive contracts” with small businesses to ensure “reasonable” price hikes.
Macron spoke to bakers gathered at the presidential palace for a traditional Epiphany kings cake ceremony, underscoring how energy and food prices are intertwined.
“Like you, I’ve had enough of people making excessive profits on the crisis,” he said.
The French government has capped natural gas and electricity price hikes to 15% this year for consumers and some very small companies that don’t use much energy. But more energy-intensive businesses, like bakeries, aren’t covered, leaving some of them facing closure because they can’t pay their bills.
While governments have offered relief on high energy bills, central banks are battling inflation by hiking interest rates.
Last month, the European Central Bank raised its benchmark rate by half a point, slowing its record pace of interest rate increases slightly but promising that more hikes are on the way. It matched actions taken by counterparts in the U.S., United Kingdom and elsewhere.
“The eurozone economy is at best stagnating, and persistently strong core inflation means the ECB will feel duty bound to press on with its tightening cycle for a while yet,” said Andrew Kenningham, chief Europe economist for Capital Economics.
Europe's inflation slows again but cost of living still high
Europe ended a bad year for inflation with some relief as price gains eased again. While the cost of living is still painfully high, the slowdown is a sign that the worst might be over for weary consumers.
The consumer price index for the 19 countries that used the euro currency rose 9.2% in December from a year earlier, the slowest pace since August, the European Union statistics agency Eurostat said Friday. Croatia joined the eurozone on Jan. 1.
It was the second straight decline in inflation since June 2021. In November, the rate dipped to 10.1% after peaking at a record 10.6% in the previous month.
Households and businesses across Europe have been plagued by surging energy costs since Russia launched its war in Ukraine in February, which played havoc with oil and natural gas markets and have been the main driver of inflation.
The latest numbers indicate that the energy crisis may be easing for now. Energy price rises slowed to 25.7%, down from 34.9% in November and 41.5% in October.
Natural gas prices have slipped from all-time highs this summer as Europe has largely filled its storage for winter with supplies from other countries while warmer-than-usual weather has reduced fears of a shortage during the heating season.
Food price gains, the other big factor that's been driving up European inflation, held fairly steady. Prices for food, alcohol and tobacco rose at a 13.8% annual pace in December, a smidgen higher than the month before.
Read more: Europe’s inflation likely hasn’t peaked, says central bank chief Lagarde
Inflation also has been worsened by bottlenecks in supplies of raw materials and parts amid rebounding global consumer demand after COVID-19 pandemic restrictions ended.
“It is likely that the peak in inflation is behind us now, but far more relevant for the economy and policymakers is whether inflation will structurally trend back to 2% from here on,” said Bert Colijn, senior eurozone economist at ING Bank.
So-called core inflation, which excludes volatile food and energy costs, climbed to 5.2% last month from November's 5%, as prices rose for both services and goods such as clothing, appliances, cars and computers. Colijn and other economists said that means European Central Bank officials will likely roll out more interest rate hikes to get inflation back to their 2% target.
Soaring costs for energy and food have threatened a recession and fed labor unrest as wages fail to keep pace with the price rises. Across Europe, subway staff, hospital workers, train drivers, postal workers and air traffic controllers have gone on strike, threatening political turmoil.
In a sign that energy costs remain a worry for political leaders, French President Emmanuel Macron on Thursday urged energy suppliers to renegotiate what he called “abusive contracts” with small businesses to ensure “reasonable" price hikes.
Macron spoke to bakers gathered at the presidential palace for a traditional Epiphany kings cake ceremony, underscoring how energy and food prices are intertwined.
“Like you, I’ve had enough of people making excessive profits on the crisis," he said.
The French government has capped natural gas and electricity price hikes to 15% this year for consumers and some very small companies that don't use much energy. But more energy-intensive businesses, like bakeries, aren't covered, leaving some of them facing closure because they can't pay their bills.
While governments have offered relief on high energy bills, central banks are battling inflation by hiking interest rates.
Last month, the European Central Bank raised its benchmark rate by half a point, slowing its record pace of interest rate increases slightly but promising that more hikes are on the way. It matched actions taken by counterparts in the U.S., United Kingdom and elsewhere.
Read more: Record inflation puts the squeeze on Eurozone economies
“The eurozone economy is at best stagnating, and persistently strong core inflation means the ECB will feel duty bound to press on with its tightening cycle for a while yet,” said Andrew Kenningham, chief Europe economist for Capital Economics.
Wall Street braces for earnings to get hit by inflation
Wall Street expects companies to face a reckoning with the realities of hot inflation, a slowing economy and rising interest rates in the latest round of earnings results.
Analysts are forecasting an earnings contraction of about 3.5% for the fourth quarter, according to FactSet. That estimate, as of the end of last year, is an about-face from forecasts back in September of 3.5% growth and a sharp reversal from 8.5% growth forecasts in June.
The dismal forecast for the fourth quarter follows is part of a trend of shrinking earnings growth throughout 2022 as inflation tightened its grip on consumers. Spending remained strong in many retail areas and companies raised prices on everything from food to clothing to offset the impact of higher raw material costs and inflation in general. Many companies went further than just maintaining profits and increased their profit margins.
Corporate profits, though, aren’t likely going to continue bucking an economy that showed clear signs of damage during the fourth quarter, particularly with consumers increasingly cutting back on spending. Many analysts have been forecasting that the economy will slip into some level of recession in 2023 and company profits are starting to reflect that. The Federal Reserve’s aggressive fight against inflation carries the risk of slowing the economy too much.
Read more: Wall Street points lower after two days of gains
Morgan Stanley, in a December report, warned investors to brace for a rough round of corporate earnings in the coming month and into the rest of 2023.
“The fixation on inflation and the Fed continues, but markets appear to have moved past it and onto the real concern— earnings growth/recession,” the report said. “Rates and inflation may have peaked but we see that as a warning sign for profitability, a reality we believe is still underappreciated but can no longer be ignored.”
Analysts expect communications companies and technology firms to be among the biggest losers during the fourth quarter. Lower demand has been cutting into technology product sales and that has in turn led to warnings from chipmakers and other companies. Computer maker HP and chipmaker Micron have both announced job cuts as a part of their plans to deal with weaker demand. Analysts are forecasting a slight earnings contraction for both companies.
The weakening economy has cut into advertising budgets, which have raised concerns for companies including Facebook and Google. Retailers and other companies that rely on discretionary spending are also expected to get hit hard in the fourth quarter.
Read more: Asian shares decline after retreats on Wall Street, Europe
Analyst expect energy companies to keep powering past other sectors as the big earnings winners during the fourth quarter. The sector has outperformed all others in 2022 amid higher oil and natural gas prices.
Economy offers reasons for optimism, even as chronic problems persist
Economists are hopeful that Bangladesh’s economy will regain the growth momentum while reducing inflation and stabilising the exchange rate in the New Year.
Despite higher inflation and fluctuating currency exchange rate, record defaulted loans, they are optimistic about the overall growth of the domestic economy, which is predicted by the IMF and World Bank to be over 6 percent still in FY23.
Major challenges including capital flight ahead of the national election, persistent loan default culture, and lack of good governance in the banking sector will however remain.
Also read: Bangladesh performing well in 3 major economic indicators, data shows
Former adviser on finance and planning to a caretaker government Dr ABM Mirza Azizul Islam told UNB that Bangladesh’s economy remains in a good position compared to many other Asian countries - including Indonesia and Singapore.
The trade deficit is widening due to the sharp rise in import demand, which should be tackled by discouraging unnecessary imports and increasing domestic agriculture production. Huge import payments have eaten away at the foreign exchange reserve, he said.
Mirza Aziz said the pace of reducing the poverty rate (proportion of population under the poverty line) has slowed down. Inflation over 8 percent is pinching people’s pockets, as it creates an imbalance in the earnings and expenditure of marginal people.
Read More: Keep wheels of economy running amid global crisis: PM urges industrialists
He also suggested cutting additional facilities for loan defaulters as it is not good for the economy and the loan default culture could be reduced if the defaulters face legal action.
Former governor of Bangladesh Bank Dr Atiur Rahman said the economy in the New Year will face both opportunities and challenges, depending mostly on developments in the global economy.
“If the war in Ukraine comes to an end the global supply chains will improve and the shipping and fuel costs will come down. This will have some positive impact in terms of reducing the level of imported inflation with a huge impact on our overall inflation as well,” he said.
Read More: Investment projection spelled out to counter hurdles for growth
“However, we also need to do more on our domestic fronts to reduce this inflation,” Dr Atiur added. Inflation is certainly the biggest problem for middle and low-income people.
On the other hand, if the Fed (US Federal Reserve, America’s central bank) stops tightening its monetary policy, it would have some positive impact on the Taka-Dollar exchange rate. On the whole, the geopolitical tensions will continue to determine the pace of Bangladesh’s economic growth and the level of inflation.
“Yet, we must continue to support agriculture, remittances, and export sectors to contribute positively from within towards better gains of our economic growth. The monetary policy should continue to move towards market-determined conditions to help stabilise inflation from the demand side,” the former governor of Bangladesh Bank said.
Read More: Green Economy in Bangladesh: Prospects and Challenges
On the whole, the challenges will remain, but the economy of Bangladesh may stabilise with a robust foundation if the global situation turns favourable and austerity measures remain in place.
Global trade growth turns negative after record year: UN
The UN trade facilitation agency has said global trade is set to hit a record high of $32 trillion for 2022, but inflation has reversed some of the gains made in recent months.
The global growth turned negative during the second half of 2022, UNCTAD added.
"Trade in goods and services is expected to reach $25 trillion and $7 trillion, respectively, by the end of the year. The downturn began in the third quarter of the year, with goods trading about one percent lower than from March to May," the UN agency said.
Although services increased by 1.3 percent in the third quarter, both goods and services are expected to fall in value in the run-up to the end of the year, according to the latest global trade update of UNCTAD.
Demand for foreign goods proved resilient through 2022, with trade volumes overall increasing by three percent.
Trade volumes of east Asian economies have shown resilience, while South-South trade lagged during the third quarter.
Read more: Bangladesh govt aims to increase money supply over next two fiscals
Overall, geopolitical frictions, persisting inflation, and lower global demand are expected to negatively affect global trade during 2023, UNCTAD said.
Gujarat will tolerate inflation but not ‘Bangladeshis, Rohingyas’ living next door, actor Paresh Rawal says
Renowned Bollywood actor Paresh Rawal has said that the people of Gujarat will bear inflation but not "Bangladeshis and Rohingyas" living next door, and his stereotyping “cooking fish” remark has also infuriated Bengalis in India.
The actor made the remarks while campaigning for BJP in Gujarat a week ago, reports NDTV.
On Monday, Paresh Rawal was called for questioning by the Kolkata Police over his comments on Bengalis after former Member of Parliament and CPI(M) leader Md Salim filed a complaint against him.
Read more: Indian beauty pageant celebrates transgender life
Md Salim wanted Paresh Rawal to be charged under various sections of the Indian Penal Code, including for promoting enmity, intentional insult, public mischief etc.
"Gas cylinders are expensive, but their price will come down. People will get employment too. But what will happen if Rohingya migrants and Bangladeshis start living around you, like in Delhi? What will you do with gas cylinders? Cook fish for the Bengalis?" — Paresh Rawal was quoted as saying last week in Valsad.
Read more: Protesting ‘Hindi imposition’, South Indian man burns himself to death
Paresh Rawal's statements sparked outrage in West Bengal, with the ruling Trinamool Congress strongly condemning him.
The veteran actor’s efforts to explain his comments with an apology later fueled the controversy more as he claimed he meant “illegal Bangladeshis and Rohingyas” when he used the word “Bengalis”.
General inflation in Bangladesh slightly down to 8.85% in Nov
Bangladesh’s general inflation ratio in November 2022 dropped slightly to 8.85 percent (point to point). In last three months, the ratio of inflation dropped.
In October, the inflation rate was 8.91 percent, while September saw an inflation rate of 9.1 percent.
Fuel price hike in August pushed the point-to-point inflation in a decade-highest 9.52 percent, which had dropped by 0.61 percent in the last two months.
Read: Inflation in Bangladesh falls slightly in Oct to 8.91%
Inflation in Bangladesh decreased mainly due to fuel prices normalizing in the global market, strengthening supply of subsidized essential food items through TCB, and a surplus of winter vegetables, said Planning Minister MA Mannan while talking to reporters at the Secretariat on Monday (December 05, 2022).
The consumer price index (CPI) data prepared by Bangladesh Bureau of Statistics (BBS) saw that non-food inflation and other inflation in November was 8.14 percent and 9.98 percent respectively, while it was 8.50 percent and 9.58 percent in October.
However, general inflation increased slightly in rural areas in November and it stood at 8.98 percent, while it was 8.92 percent in October.
Read: Inflation: UN expert for increasing benefits, wages or lives will be lost
The general inflation in urban areas of Bangladesh has decreased point to point 8.70 percent, while it was 8.90 percent in October 2022.