Commerce Minister Khandaker Abdul Muktadir has told parliament that the fuel oil price hike is not responsible for the country’s inflation, claiming that Bangladesh’s price increase is at a “very moderate” level compared to the international market.
Responding to a supplementary question from independent MP Rumeen Farhana during Monday’s parliamentary session presided over by Deputy Speaker Kayser Kamal, the minister said inflation had been in double digits for a long time and remains above 9 percent for food items.
“We need to understand why inflation is increasing. Compared to the rate at which fuel oil prices have increased worldwide, the increase in Bangladesh is much lower,” Muktadir said.
He explained that only 7 to 8 percent of total production cost in an industrial factory is spent on fuel, and diesel prices have been increased by 15 percent. “The impact is 15 percent on that 7-8 percent of production cost, which is not a very large shock,” he added.
Citing the transport sector, the minister said a bus uses 25-30 litres of diesel to travel 200 kilometres, increasing costs by Tk 450. That truck carrying 10,000 kg of goods spreads the Tk 450 impact across the entire load.
“Hearing this, one might think the price has increased a lot, but when calculated on a per-unit basis of the transported goods, it is not a big enough stimulus to cause inflation,” Muktadir said.
He noted that fuel oil price adjustment is automated in many countries, requiring no separate government action. Giving the example of the United States, he said prices per gallon rose from $2.70-80 to over $5 after the war.
“You cannot take the economy to a place where it reaches fundamental balance imbalance. To maintain that balance, we have adopted the same policy that all countries of the world have adopted, and we have increased prices moderately,” the commerce minister said.
