Economists believe that the rate of inflation has come down mainly due to the fall in food prices
According to the Trading Corporation of Bangladesh (TCB), the price of rice depending on quality declined by 6.25 percent to 7.41 percent in May compared to April.
Inflation decreased by 0.61 percentage points in May due to fall in demand because of the coronavirus crisis and expected harvest in Boro season.
According to the latest report by the Bangladesh Bureau of Statistics (BBS), overall inflation fell to 5.35 percent in May. In April, it was 5.96 percent.
Economists believe that the rate of inflation has come down mainly due to the fall in food prices. This is also reflected in the BSS report.
Food prices fell by 3.07 percent at national level in May, the report said. Food prices declined by 3.35 percent in rural areas and 2.43 percent in urban areas. As a result, the overall price index fell by 1.75 percent in May compared to April.
Analysis reveals product prices remained stable in April although they were sold at higher prices in March before general holiday announcement because of coronavirus. In May, product price and demand increased a bit because of Eid.
Former lead economist at the Dhaka office of the World Bank Dr Zahid Hussain told The Business Standard people did not buy anything other than food that much in the last three months as their income fell due to coronavirus.
"Traders increased rice prices on the pretext of supply shortage in April. But prices fell in May because of a good harvest," he said.
"People bought a lot less this Eid compared to last year. They did not buy anything in Pahela Baishakh. It is normal for inflation to go down when demand falls."
The BBS report, which will be presented at the Executive Committee of the National Economic Council meeting, said overall inflation was 5.96 percent in April, which was 5.48 percent in March. So, inflation rose by 0.48 percentage points in a month.
Also, overall inflation fell to 5.35 percent in May, and inflation fell by 0.61 percentage points in a month.
Price of food items increased by 5.09 percent in May compared to the same period of the previous year, which was 5.91 percent in April.
The country observed inflation at 5.75 percent for non-food items in May, which was 6.04 percent in April.
Inflation in rural areas was 5.65 percent in May, substantially lower than the April figure of 6.08 percent.
Food inflation in rural areas was 5.61 percent in May, which was 6.17 percent in April, while non-food inflation in rural areas dropped to 5.73 percent in May from 5.92 percent in April.
Urban areas have observed inflation at 4.81 percent in May, which was 5.73 percent in April. Food inflation in urban areas dropped to 3.94 percent in May from 5.33 percent in April. Non-food inflation also dropped in urban areas to 5.79 percent in May from 6.20 percent in April.
May inflation rate of 5.35 percent indicates that a commodity, which was Tk100 last year, will now cost Tk105.35. One will have to buy a lower volume of the commodity if one's income remains static.