5.6% average inflation in FY2022-23

Finance Minister AHM Mustafa Kamal said that the average inflation will be 5.6% in the next fiscal year, while placing the budget at the parliament on Thursday (9 June).

"The government is committed to contain the rising trend of inflation by addressing inconsistencies between supply and demand. Although it remained under control until the first quarter of this year, there has been a recent spike, mainly due to external and some internal factors", said the minister.

"We have introduced sales through TCB so that the low-income people of the country can buy daily necessities at lower prices. In addition, a significant portion of the poor has been brought under the social security programmes", he added.

The minister said that the causes of inflation at the global level include, among others, rising inflation in trade partners, rising oil prices, depreciation of Taka against USD, disruption of the global supply chain and the Russia-Ukraine crisis - all of which are largely beyond our control.

The global price of food and fuel is rising due to Russia-Ukraine conflict. Compared to May 2021, in May 2022 there has been 65% increase in fuel price, 114% increase in the price of urea fertilizer, 29% increase in soybean oil price, 85% increase in wheat price and 13% increase in sugar price. 

Due to these price escalations, several international research organisations forecasted global inflation.

The World Economic Outlook of the International Monetary Fund published in April 2022 forecasted 5.7% CPI inflation in the developed economies in 2022, which was 3.1% in 2021. 

Among these economies, inflation in the USA would be 7.7% in 2022. On the other hand, inflation in the emerging and developing economies which was 5.9% in 2021, is expected to rise to 8.7% in 2022.

The Government wants to contain inflation, increase employment and address other macroeconomic challenges by increasing supply while reducing the growth in demand. To recover from the sluggish growth of the economy due to the Covid-19 pandemic, the government has taken several countercyclical measures for enhancing industrial production and boosting the export sector namely, the creation of a special fund of Tk5,000 crore for paying wages and salaries of the employees in the export-oriented industries, a fund of Tk73,000 crore for affected large industrial and service sector enterprises, a fund amounting Tk40,000 crore for lending against working capital for the CMSMEs, enhancement of Export Development Fund from $3.5 billion to $ 6 billion and subsidising the interest beyond 2% and a pre-shipment credit refinancing project of Tk5,000 crore.

Considering all these measures the inflation will be 5.6% in the next fiscal, said the finance minister.

Finance Minister AHM Mustafa Kamal has placed the Tk6,78,064 crore national budget for FY23 at Jatiya Sangsad according top priority to safeguarding marginal people from inflation fuelled by the Russia-Ukraine conflict.

This is the fourth budget of the third consecutive term of the government led by Prime Minister Sheikh Hasina and also the overall 51st budget of the country.

The proposed budget is Tk74,383 crore higher than the original budget size of the FY2021-22 fiscal year, which was Tk6,03,681 crore.