Editorial
Inflation rate still rising
An election year worry
Since 1998-99 fiscal, the rate of inflation had started increasing following devastating floods, but the upward trend continues even to this day. What was 7.06 percent in 1998-99 markedly increased to 7.93 percent in August 2005 and then plateaued at 7.95 percent as of November 2005, the highest figure of inflation in the last eight years.One might argue that the rise in inflation has been staggered over the last eight years and, to that extent, it needn't be seen with an alarmist eye. But that is being skin-deep; for, the fact of the matter is that it has been steadily and consistently upward in movement with no signs of going down whatsoever -- in spite of good crops and supply positions in the last couple of years. Furthermore, the 'bank-rolling' of an election year is round the corner, as a fuel to inflation. The factors that have fuelled inflation are pretty much identifiable and, therefore, we are in the know of where the corrections are needed. First of all, there has been a sudden leap in fuel prices. Let's not forget that several fuel price hikes last year pushed up the input costs of production and the transportation expenses with the result that food prices soared. The prices of other essentials also increased. There have also been flawed distribution of agricultural subsidies, especially in relation to boro cultivation where farmers were hard put to use fertiliser in the peak season. This is likely to affect the food supply position somewhat. The overall import-dependent supply side is distorted by monopoly and 'hegemony' being exercised by particular sections of businessmen who are apt to manipulate the market prices of imported goods. The depreciation of taka value by nine percent as against dollar has factored in an element of imported inflation to the prices. This is an election year in which the ruling party will be under pressure from within to yield to market cronyism but unbridled higher prices would make them lose votes, something they need to be wary of. Our primary concern is the possibility of heavier government borrowing from the banking system induced by increased public spending as the national election approaches. This scrounging of money from the banks has been one of the major causes for putting inflation on an upward spiral. The government knows the stake and must now act to put a lid on over-expenditure of any kind whatsoever. In fact, it needs to practice austerity.
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