Among the South Asian countries, Bangladesh now has the highest inflation rate. Recently, while practically all South Asian countries have had success in managing inflation, Bangladesh is an exception. In other words, Bangladesh has the strongest inflationary pressure among South Asian countries. In this environment, analysts believe policymakers should carefully assess whether the interim government’s intention to increase VAT (Value Added Tax) is reasonable and timely. They warn that raising taxes in the face of increasing inflation could exacerbate the problem. As a result, the expected revenue from the VAT rise may not be realized.
Among the South Asian countries: To contain inflation, the Bangladesh Bank has already roughly doubled bank loan and policy interest rates. The International Monetary Fund (IMF) had set this requirement of hiking interest rates to combat inflation. However, rather than falling, inflation has continued to grow, compounding public hardship. Meanwhile, under IMF conditions, the administration has announced plans to raise the VAT rate to 15%. Additionally, steps have been taken to increase supplemental duties.
Last Thursday, economic advisor Dr. Salehuddin Ahmed indicated that VAT rises on numerous items were implemented not just to meet IMF requirements, but also to enhance revenue. However, he guaranteed that the decision to raise VAT on 43 products will not have an influence on the prices of vital commodities.
According to the most recent data from the Bangladesh Bureau of Statistics (BBS), food inflation increased to 13.80% in November. Although food inflation reached 14.10 percent in July, it fell marginally in November. However, the overall inflation rate rose to 11.38%. This indicates that in November 2024, what might have been purchased for 100 taka in November 2023 would cost 111 taka and 38 paisa.
According to reports, Sri Lanka was one of the countries experiencing high inflation as a result of economic crises such as the dollar shortage. Two years ago, in September 2022, the South Asian island nation’s inflation rate peaked at 70%. After failing to repay foreign loans and declaring bankruptcy, the government has reduced its inflation rate to less than one percent. Sri Lankan media reported that the country’s inflation rate was 0.5% in August.
In South Asia, Pakistan’s inflation rate had long been in the double digits. Despite the country’s continued economic turmoil, inflation has finally dropped to single digits. Last month, Pakistan’s inflation rate was 9.64 percent, compared to more than 27 percent in August 2023.
Aside from Bangladesh, South Asian countries include India, Pakistan, Sri Lanka, the Maldives, Nepal, and Bhutan. According to data from the central banks of these seven nations, Sri Lanka now boasts the region’s lowest inflation rate. In August, Sri Lanka’s inflation rate was only 0.5%. The Maldives has the second lowest inflation rate, at 1.4%, followed by Bhutan at 2.04%, Nepal at 3.57 percent, and Pakistan at 9.64 percent. According to The Economic Times, India’s inflation rate is 5.5 percent. Notably, inflation data for the Maldives, Nepal, and Bhutan is only current through July.
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