Inflation
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.
Austerity the new buzzword as govt lowers expenditure estimates
The government of Bangladesh has been compelled to pull down its projections for expenditure in the coming couple of years – in light of the changed economic reality brought about mainly by the Russia-Ukraine war and its aftermath of sanctions and counter-sanctions.
In its projections for the 2021-22 budget, the government had projected its total expenditure at 17 percent of GDP for the next two fiscals, i.e. 2022-23 and 2023-24.
However, in preparing the budget for 2022-23, the government has estimated expenditure at 15.2 percent of GDP for the 2022-23 fiscal, while it will be 15.5 percent for the 2023-24 fiscal.
By 2024-25, as per a budget document, the target for expenditure has been set at 15.6 percent of GDP.
Read more: Austerity is on but people will get electricity: PM
The government in the last fiscal, 2021-22, had set the expenditure target at 17.5 percent, but it was revised to 14.9 percent.
This is part of the government’s austerity drive in terms of expenditure, given all the forecasts that the world is heading towards an economic recession in 2023.
According to the document, government expenditure was 13 percent of GDP in 2020-21 fiscal.
As per the document, with successful implementation of reforms in Public Financial Management, government expenditure kept increasing since the 2015-16 fiscal.
Read more: PM reiterates call to practice austerity in all spheres of life
It also mentioned that the Annual Development Programme (ADP) was 4.5 percent of the GDP in the 2020-21 fiscal.
In the current fiscal, the government plans to allocate 5.5 percent of the GDP for the ADP while it is 6.3 percent for 2022-23 and 6.4 percent for 2024-25.
The document is revealing in how large the Russia-Ukraine conflict looms in the government’s calculations, and the challenges posed in its wake.
The “unprecedented” price hike in the international energy market, food supplies and other essential commodities alongside the widespread disruption in international supply chains have adversely affected the global economy, including Bangladesh.
Read More: Govt focuses on less current expenditure and increased capital spending: official document
The conflict is likely to emerge as a new obstacle in the way of achieving development targets, as well as full recovery from the COVID-19 crisis.
The prices of essential import commodities for Bangladesh like oil, gas, fertiliser, edible oil, etc. have skyrocketed in the international market.
According to Finance Division estimate, only nine essential commodities (crude and refined oil, LNG, wheat, fertiliser, palm oil, coal, soybean oil, maize and rice) imported to Bangladesh will cost an additional USD 8.2 billion in 2022, considering the rise in their prices over that in 2021.
The other key import items like consumer goods, capital machineries and industrial raw materials have also seen significant price escalations in the international market. In addition, the costs of international logistics are on the rise. Import-induced inflation, therefore, is gradually emerging as a major concern for Bangladesh Government.
Read More: Govt spending on public servants is to rise next fiscal
Europe’s inflation likely hasn’t peaked, says central bank chief Lagarde
The head of the European Central Bank said Monday she does not believe inflation has peaked after reaching the highest levels on record.
ECB President Christine Lagarde also told European lawmakers that the bank isn't through raising interest rates to combat those price spikes.
There is too much uncertainty to know whether inflation, which hit 10.6% in October, would come down soon in the 19 countries that use the euro currency, Lagarde said.
When looking at what is driving inflation, “whether it is food and commodities at large, or whether it is energy, we do not see the components or the direction that would lead me to believe that we have reached peak inflation and that it is going to decline in short order," she said.
That means the central bank will “continue to tame inflation with all the tools that we have," primarily interest rate hikes, Lagarde told the European Parliament's Committee on Economic and Monetary Affairs.
Read more: European leader calls on world, China to pressure Russia
Following the bank's third major rate hike in October, marking its fastest pace of increases ever, the ECB expects "to raise rates further to the levels needed to ensure that inflation returns to our 2% medium-term target in a timely manner," she said.
The ECB has joined the U.S. Federal Reserve and other central banks around the world in rapidly raising rates to combat inflation that spiked as the global economy recovered from the COVID-19 pandemic, then got worse after Russia invaded Ukraine. Central banks risk tipping economies into recession as the world copes with an energy crisis, higher food costs and currencies weakening against the U.S. dollar.
The Paris-based Organization for Economic Cooperation and Development predicted the international economy would expand only 2.2% next year. Most economists expect a recession in places like Europe, the U.S. and the United Kingdom next year, with ECB Vice President Luis de Guindos saying this month that risk “has become more likely" in the eurozone.
Russia's war hit Europe particularly hard, “given our proximity to the conflict and our dependence on energy imports" from Russia, Lagarde said Monday.
Read more: Record inflation puts the squeeze on Eurozone economies
After Russia cut back most natural gas to Europe, sending energy prices soaring, governments have provided aid to help households and businesses with their bills.
Lagarde warned officials not to worsen inflation by ensuring support is “targeted, tailored and temporary" to those most at need and avoids weakening the push to cut energy use.
Inflation in Bangladesh falls slightly in Oct to 8.91%
The overall inflation in Bangladesh fell to 8.91 percent in 2022's October, on a point-to-point basis, from 9.1 percent in September this year.
Planning Minister MA Mannan shared the information on Tuesday (November 08, 2022) at a press conference after the meeting of Executive Committee of the National Economic Council (ECNEC).
Depreciation of taka should be considered positively as it helps to increase US dollar supply in the market, he said.
Read more: Inflation: UN expert for increasing benefits, wages or lives will be lost
In reply to a question, Mannan said, “As per Bangladesh Bank, foreign exchange reserves are close to $35 billion, no matter what the IMF said.”
In August this year, the overall inflation in the country rose to 9.5 percent. This important and sensitive indicator of the economy was the highest in August in the last 12 years.
In the fiscal 2010-11, the average inflation rate of the country was 10.92 percent. After that, this index did not rise above 9 percent.
Read more: August inflation data finally released, with September
Due to the increase in prices of daily essentials, and fuel in the international market, there was a trend of rising inflation in the country for several months.
On August 5, the government increased fuel prices by 42 to 51 percent. The price of diesel was increased by Tk 34 per litre, octane by Tk 46 per litre, and petrol by Tk 44 per litre. This record jump in fuel prices contributed to the record inflation in Bangladesh.
1 in 4 Europeans say they are in financially 'precarious' situation: Survey
Many Europeans are now facing hard choices due to a difficult financial situation and more than one in four of them said they are in a "precarious" situation and over half see a serious risk it will become so over the coming months, with an unexpected expense that could push them into poverty, according to a survey.
This feeling is particularly strong in Greece and France.
As the cost of living, driven by higher energy prices, raging inflation and war in Ukraine, tightens their grip, Pollster Ipsos and French anti-poverty NGO Secours Populaire have set up a "European Barometer of Precariousness and Poverty" for the first time to observe the social situation, opinions, and concerns of people in France, the UK, Germany, Greece, Italy and Poland.
Half of more than 6,000 people polled in the six countries, from June 17 to July 6, told Ipsos that their purchasing power had shrunk over the past three years – mainly due to soaring food, fuel, heating and rent bills.
Read: Soaring inflation threatens to unleash political turmoil across Europe
In this "very difficult context, Europeans do not feel secure." Across Europe, rising inflation is behind a wave of protests and strikes that underscores growing discontent with the spiralling cost of living and threatens to unleash political turmoil.
Europeans have seen their energy bills and food prices soar because of the war in Ukraine. Despite natural gas prices falling from record summer highs and governments allocating over $566 billion in energy relief to households and businesses since September 2021, it is not enough for some protesters, according to the think tank Bruegel.
Energy prices have driven inflation in the 19 countries that use the euro currency to a record 9.9 percent, making it harder for people to buy what they need.
"Many Europeans have declared falling into financial difficulties. This situation is particularly difficult in Greece, where 51 percent of respondents said they are in this situation," Ipsos said.
Around 55 percent of Europeans feel that there is a significant risk that they will find themselves in an unstable financial situation in the coming months, with inflation continuing to rise in the continent.
Read: Europe sees fastest pace of rate hikes since euro launched
They have little financial wiggle room, with 64 percent of respondents indicating they are unsure of which expense to cut back on because they have already done so. This anxiety is growing in Italy and Greece and now concerns seven out of 10 people.
"More than one in three Europeans said they have had to restrict their travel recently. More than one in five said they have been cold recently and have not turned up the heating at home. One in seven has even had to ask for the help of relatives or take several jobs," Ipsos said.
"Beyond their own situation, the Europeans see the precariousness around them, particularly in their neighbourhoods, with 41 percent observing that there are many precarious people in their neighbourhoods and 30 percent in their close circle or at work. This difficult situation is particularly worrying in Greece, Italy and Poland."
Amidst recession fears, Biden has to convince Americans job gains mean better days ahead
President Joe Biden has notched an envious record on jobs, with 10.3 million gained during his tenure. But voters in Tuesday’s midterm elections are far more focused on inflation hovering near 40-year highs.
That’s left the president trying to convince the public that the job gains mean better days are ahead, even as fears of a recession build.
Presidents have long trusted that voters would reward them for strong economic growth, but inflation has thrown a monkey wrench into the already difficult probability of Democrats’ retaining control of the House and Senate.
Economic anxieties have compounded as the Federal Reserve has repeatedly hiked its benchmark interest rates to lower inflation and possibly raise unemployment. Mortgage costs have shot upwards, while the S&P 500 stock index has dropped more than 20% so far this year as the world braces for a possible downturn.
Biden is asking voters to look beyond the current financial pain, saying that what matters are the job gains that he believes his policies are fostering. The government reported Friday that employers added 261,000 jobs in October as the unemployment rate bumped up to 3.7%.
Roughly 740,000 manufacturing jobs have been added since the start of Biden’s presidency, a figure that the president says will keep rising because of his funding for infrastructure projects, the production of computer chips and the switch to clean energy sources.
“America is reasserting itself — it’s as simple as that,” Biden said in a Friday speech. “We also know folks are still struggling with inflation. It’s our number one priority.”
Yet the president is also warning that a Republican majority in Congress could make inflation worse by seeking to undo his programs and treating payments on the federal debt as a bargaining chip instead of an obligation to honor.
Read: Bangladesh an important country: US President
His challenge is that the party in power generally faces skeptical voters in U.S. midterms and inflation looms over the public mindset more than job growth.
“If you have a job, it’s small comfort to know that the job market is strong if at the same time you feel like every paycheck is worth less and less anyway,” said pollster Kristen Soltis Anderson. “Inflation is such political poison because voters are reminded every day whenever they spend money that it is a problem we are experiencing.”
As Biden tries to fend off fears that inflation is causing the country to slide into a recession, his chief evidence of the economy’s resilience is the continued job growth.
“As we see the economy as a whole, we do not see it going into a recession,” White House press secretary Karine Jean-Pierre told reporters in anticipation of the latest jobs report.
Going into the election, Biden and Democrats are already at a disadvantage. Voters generally favor the party out of the White House in midterms, giving Republicans an automatic leg up. When Yale University economist Ray Fair looked at past elections, his model forecast that Democrats would get just 46.4% of the national vote largely because Biden was in the Oval Office.
Fair’s analysis suggests that inflation basically erased the political boost that Democrats could have gotten from strong economic growth during three quarters in 2021. Even if the economy is top of mind for many voters, the conflicting forces of past growth and high inflation cancel out each other.
This makes the Democrats’ vote share roughly the same as suggested by the historical trend, Fair concluded.
Read: Record inflation puts the squeeze on Eurozone economies
But inflation compounds the obstacles for a president who has tried to convey optimism as he tours the country in the run-up to the elections. Research in social psychology and behavioral economics generally shows that people often focus on the negatives and can block out the positives.
“People pay more attention to bad news than to good news and are more likely to retain and recall bad news,” said Matthew Incantalupo, a political scientist at Yeshiva University.
Incantalupo’s research looks at how voters absorb economic news. When unemployment is low, as it is now, he said, voters generally think about jobs as a personal issue — rather than a systemic one involving government policies. But most think about inflation as a social problem beyond any person’s control, unless that individual happens to run the Fed.
“When it is high, everyone experiences it at least a little bit, and there really is no individual way to avoid it,” Incantalupo said. “Voters are going to look to government for remedies under those circumstances, and in many cases that will result in them punishing incumbents, even in the presence of other positive news about the economy.”
Republican candidates have specifically said Biden’s $1.9 trillion coronavirus relief package last year overheated the economy, causing prices to rise alongside the job gains that they claim would have happened anyway as the pandemic receded. They have also said that Biden should have loosened restrictions on oil production, in order to increase domestic output and lower gasoline prices.
House Republican leader Kevin McCarthy — who could become speaker if the GOP wins a House majority — has hammered Biden on high prices. As Biden has warned that Republicans who deny the outcome of the 2020 election are a threat to democracy, the California congressman countered that what voters care about are the costs of gas and groceries.
Read: Inflation: UN expert for increasing benefits, wages or lives will be lost
“President Biden is trying to divide and deflect at a time when America needs to unite — because he can’t talk about his policies that have driven up the cost of living,” McCarthy tweeted this past week. “The American people aren’t buying it.”
Still, inflation is not solely a domestic issue. After Russia invaded Ukraine, energy and food costs rose and suddenly flipped the global dynamics as inflation rose faster in parts of the world with less aggressive coronavirus relief than the U.S. Annual inflation in the euro zone is a record 10.7%, much higher than the 8.2% in the U.S.
Meanwhile, growth has slowed in China, the pace of world trade is slipping and Saudi Arabia-led OPEC+ has cut oil production in order to prop up prices. And because the Fed is raising rates to lower domestic inflation, the dollar has increased in value and essentially exported higher prices to the rest of the world.
This has left U.S. voters in the curious position of not necessarily blaming the president for inflation, even as they disapprove of his economic leadership.
An October poll by AP-NORC Center for Public Affairs captured this split. More than half of voters say that prices are higher because of factors beyond Biden’s control. But just 36% approve of his economic leadership.
August inflation data finally released, with September
Bangladesh Bureau of Statistics (BBS) has finally released the official inflation data for the month of August, confirming it rose to the highest in a generation, together with the number for September.
According to the BBS report released on Tuesday, inflation in August reached 9.52 percent, the highest in 135 months (11 years, 3 months). But it eased slightly in September, coming down to 9.1 percent.
The number for July, at 7.48 percent, had already been the highest in 9 years.
The nature of the delay adds further fuel to speculation that had been rife about the government being hesitant to share data when it may go against their own narrative - making today's released data look even worse than it is.
As inflation eased slightly in September, the government felt more comfortable to officially release the data for two months together.
Planning Minister MA Mannan disclosed the inflation update at the end of an ECNEC meeting on Tuesday.
Emerging, developing countries' right to development at risk as inflation keeps rising
Rising global inflation is expected to wallop emerging and developing countries this year, adding to a confluence of crises, the UN's acting human rights chief has said.
Nada Al- Nashif cited the International Monetary Fund (IMF) forecasts that advanced economies should brace themselves for average inflation rates of 6.6 percent in 2022, well below the 9.5 percent rate expected to hit poorer nations.
She added that although the world's richest countries had seen employment rates return or exceed pre-pandemic levels by the end of 2021 most middle-income countries had not yet managed to recover from the Covid crisis.
The coronavirus had exposed and exacerbated pre-existing inequalities and set back sustainable growth by several years in many parts of the world, the acting UN rights chief told the Human Rights Council in Geneva Thursday.
Unsustainable sovereign debt burdens had also weighed down many developing nations because they had negative repercussions for providing social protection, Al-Nashif said, adding that many countries now faced unprecedented fiscal challenges because their hands had been tied by expensive loan repayments.
To make matters worse, the Russian invasion of Ukraine on 24 February had led to major human suffering inside the country, and beyond its borders.
The war had also triggered new disruption to global supply chains, contributing to skyrocketing fuel and food prices that had affected women and girls disproportionately, Al-Nashif said.
According to the World Bank, 75 to 95 million more people are expected to live in extreme poverty this year, compared to pre-pandemic projections.
The confluence of crises has created spin-off effects on food and nutrition, health and education, the environment, peace and security, further undermining progress toward the realisation of the 2030 Agenda and jeopardising sustainable recovery from the pandemic, Al-Nashif said.
Bangladesh’s exports worth $4.60bn in Aug, up by 36.18%: EPB data
Despite the ongoing global crisis and inflation, Bangladesh exported over USD $4.6 billion worth of goods in August with a record 36.18 percent growth.
Bangladesh's export worth in August also exceeded the set target. The export target for the second month of the current financial year (2022-23) was $4.3 billion, Export Promotion Bureau (EPB) revealed the data today (September 4, 2022).
According to the statistics, the export earnings growth of Bangladesh has reached to 25.31 percent at the end of the first two months of the current financial year. The total export in two months was $8.59 billion, which is 4.52 percent over the target.
Also read: All export-oriented industries should get equal facilities: Salman F Rahman
According to EPB, in FY2021-22, goods worth $3.38 billion were exported in August. Compared to the last financial year, $1.22 billion more in exports have been made this year.
On the other hand, in July, the first month of this fiscal year, the export of goods worth Tk $3.98 billion was 14.72 percent more compared to the same period of the previous year.
Readymade garment products, home textiles, and other apparel products have played a significant role in exports as always. Garment exports in July and August were worth $7.11 billion. The growth is 26 percent.
Read: Exports to China can grow with extension of duty-free access to 380-plus new products
At the same time, the export of leather and leather products was worth $22.32 crore. The growth is about 28 percent. And the export of jute goods was $15.66 crore, where the growth is about 23 percent.
Powell: Fed’s inflation fight could bring ‘pain,’ job losses
Federal Reserve Chair Jerome Powell delivered a stark warning Friday about the Fed’s determination to fight inflation with more sharp interest rate hikes: It will likely cause pain for Americans in the form of a weaker economy and job losses.
The message landed with a thud on Wall Street, sending the Dow Jones Industrial Average down more than 1,000 points for the day.
“These are the unfortunate costs of reducing inflation,” Powell said in a high-profile speech at the Fed’s annual economic symposium in Jackson Hole. “But a failure to restore price stability would mean far greater pain.”
Investors had been hoping for a signal from Powell that the Fed might soon moderate its rate increases later this year if inflation were to show further signs of easing. But the Fed chair indicated that that time may not be near, and stocks tumbled in response.
Runaway price increases have soured most Americans on the economy, even as the unemployment rate has fallen to a half-century low of 3.5%. It has also created political risks for President Joe Biden and congressional Democrats in this fall’s elections, with Republicans denouncing Biden’s $1.9 trillion financial support package, approved last year, as having fueled inflation.
The Dow Jones average finished down 3% on Friday, its worst day in three months. The tech-heavy Nasdaq composite shed nearly 4%. Shorter-term Treasury yields climbed as traders built up bets for the Fed to stay aggressive with rates.
Some on Wall Street expect the economy to fall into recession later this year or early next year, after which they expect the Fed to reverse itself and reduce rates.
A number of Fed officials, though, have pushed back against that notion. Powell’s remarks suggested that the Fed is aiming to raise its benchmark rate — to about 3.75% to 4% by next year — yet not so high as to tank the economy, in hopes of slowing growth long enough to conquer high inflation.
“The idea they are trying to hammer into the market’s head is that their approach makes a rapid pivot to (rate cuts) unlikely,” said Eric Winograd, an economist at asset manager AllianceBernstein. “They are going to stay tight even when it hurts.”
After raising its key short-term rate by a steep three-quarters of a point at each of its past two meetings — part of the Fed’s fastest series of hikes since the early 1980s — Powell said the Fed might ease up on that pace “at some point,” suggesting that any such slowing isn’t near.
Powell said the size of the Fed’s rate increase at its next meeting in late September — whether one-half or three-quarters of a percentage point — will depend on inflation and jobs data. An increase of either size, though, would exceed the Fed’s traditional quarter-point hike, a reflection of how severe inflation has become.
Read: US inflation will likely stay high even as gas prices fall
The Fed chair said that while lower inflation readings that have been reported for July have been “welcome,” he added that, “a single month’s improvement falls far short of what (Fed policymakers) will need to see before we are confident that inflation is moving down.”
On Friday, an inflation gauge that is closely monitored by the Fed showed that prices actually declined 0.1% from June to July. Though prices did jump 6.3% in July from 12 months earlier, that was down from a 6.8% year-over-year jump in June, which had been the highest since 1982. The drop largely reflected lower gas prices.
In his speech Friday, Powell noted that the history of high inflation in the 1970s, when the central bank sought to counter high prices with only intermittent rate hikes, shows that the Fed must stay focused.
“The historical record cautions strongly against prematurely” lowering interest rates, he said. “We must keep at it until the job is done.”
What particularly worries Powell and other Fed officials is the prospect that inflation would become entrenched, leading consumers and businesses to change their behavior in ways that would perpetuate higher prices. If, for example, workers began demanding higher pay to match higher inflation, many employers would then pass on those higher labor costs to consumers in the form of higher prices.
Many analysts speculate that Fed officials want to see roughly six months or so of lower monthly inflation readings, similar to July’s, before stopping their rate hikes.
Powell’s speech was the marquee event of the the Fed’s annual economic symposium at Jackson Hole, the first time the conference of central bankers is being held in person since 2019, after it went virtual for two years during the COVID-19 pandemic.
Since March, the Fed has implemented its fastest pace of rate increases in decades to try to curb inflation, which has punished households with soaring costs for food, gas, rent and other necessities. The central bank has lifted its benchmark rate by 2 full percentage points in just four meetings, to a range of 2.25% to 2.5%.
Those hikes have led to higher costs for mortgages, car loans and other consumer and business borrowing. Home sales have been plunging since the Fed first signaled it would raise borrowing costs.
In June, the Fed’s policymakers signaled that they expected their key rate to end 2022 in a range of 3.25% to 3.5% and then to rise further next year to between 3.75% and 4%. If rates reached their projected level at the end of this year, they would be at the highest point since 2008.
Powell is betting that he can engineer a high-risk outcome: Slow the economy enough to ease inflation pressures yet not so much as to trigger a recession.
His task has been complicated by the economy’s cloudy picture: On Thursday, the government said the economy shrank at a 0.6% annual rate in the April-June period, the second straight quarter of contraction. Yet employers are still hiring rapidly, and the number of people seeking unemployment aid, a measure of layoffs, remains relatively low.
At its meeting in July, Fed policymakers expressed two competing concerns that highlighted their delicate task.
Read: US inflation jumped 7.5% in the past year, a 40-year high
According to minutes from that meeting, the officials — who aren’t identified by name — have prioritized their inflation fight. Still, some officials said there was a risk that the Fed would raise borrowing costs more than necessary, risking a recession. If inflation were to fall closer to the Fed’s 2% target and the economy weakened further, those diverging views could become hard to reconcile.
At last year’s Jackson Hole symposium, Powell listed five reasons why he thought inflation would be “transitory.” Yet instead it has persisted, and many economists have noted that those remarks haven’t aged well.
Powell indirectly acknowledged that history at the outset of his remarks Friday, when he said that, “at past Jackson Hole conferences, I have discussed broad topics such as the ever-changing structure of the economy and the challenges of conducting monetary policy.”
“Today,” he said, “my remarks will be shorter, my focus narrower and my message more direct.”