STAR BUSINESS REPORT

Inflation eased to 8.71 percent in March, offering slight relief to consumers, but analysts warn that prices may remain sticky in the coming months as the US-Israel war on Iran drives up costs and disrupts supply chains.

Food price inflation fell to 8.24 percent from 9.3 percent the previous month, according to data released yesterday by the Bangladesh Bureau of Statistics. Non-food inflation, however, edged up to 9.09 percent from 9.01 percent in February.

The moderation follows a spike to 9.13 percent in February, a ten-month high, when higher food prices ahead of Ramadan and increased election-related spending fuelled demand, pushing the Consumer Price Index.

Md Deen Islam, professor of economics at Dhaka University, said, “Food prices carry a large weight in the consumer basket, and the decline in inflation might be driven mainly by a moderation in food prices.”

Three factors -- improved supply of food due to no major climate shock, the lagged effects of relatively tighter monetary policy, and subdued aggregate demand -- may have helped contain overall price increases, he added.

However, the persistence and slight increase in non-food inflation to 9.09 percent signal that underlying cost pressures in the economy remain strong, noted the professor.

“Non-food components such as energy, transport, and imported goods continue to be affected by exchange rate depreciation and elevated global prices,” he said.

Bangladesh has been grappling with stubborn inflation for more than three years, with the burden falling hardest on poor and low-income households, who spend a disproportionate share of their earnings on food.

In March, rural inflation was marginally higher at 8.72 percent compared to 8.68 percent in urban areas.

Zahid Hussain, former lead economist at the World Bank’s Dhaka office, said food inflation above 8 percent shows that price pressures persist.

“A slight easing in March is not unusual, but it does not mean inflationary pressure has disappeared,” he said.