Inflation in June, the last month of fiscal year 2021-22, soared to 7.56%, which is reportedly the highest in eight years, according to a report by the Bangladesh Bureau of Statistics (BBS).

Earlier in May, this index rose to 7.42%. It jumped another 0.14% points in June, said the BBS report published on Tuesday.

The average inflation rate stood at 6.15% at the end of FY22, 0.85% more than the target. 

The government had set out to keep inflation restricted at 5.30% last fiscal. 

Food inflation was 8.37% in June. It was 8.30% in May.

Non-food inflation rose to 6.33% from 6.08% last month.

Asked about the steady rise of inflation, AB Mirza Azizul Islam, economist and former financial adviser to the caretaker government, told Dhaka Tribune: “The demand for both food and non-food items in the market are increasing after the Covid-19 economic shock. Meanwhile, the value of Taka has declined against the dollar as well."

"I think all these factors have been continuously affecting the inflation rate of the country for the last few months,” he added.

Regarding steps Bangladesh Bank can take in this situation, Ashikur Rahman, senior economist at the Policy Research Institute (PRI) and a member secretary of Bangladesh Economists' Forum (BEF), told Dhaka Tribune that the prices of products have increased both in the country and in the international market.

"In this situation, reducing inflation is really a big challenge. But I think imported inflation can be reduced a bit. In this case Bangladesh Bank can increase LC interest rate. Imports will decrease as well as imported inflation," he also said.

The issue is that while inflation is almost always extremely painful for the poor and low-income groups, business elites often oppose interest rate hikes, arguing that it will cost them more under such tight monetary scenario, Rahman added.