Bangladesh announces fuel price jump, stokes inflation fears

By Ruma Paul

DHAKA (Reuters) -Bangladesh raised gasoline costs by round 50% on Saturday, a transfer that can trim the nation’s subsidy burden however put extra stress on inflation that’s already operating above 7%.

The South Asian nation’s $416 billion financial system has been one of many fastest-growing on this planet for years.

Nonetheless, hovering vitality and meals costs as a result of Russia-Ukraine warfare have inflated its import invoice, forcing the federal government to hunt loans from world businesses, together with the Worldwide Financial Fund.

The value for petrol has been elevated by 51.2% to 130 taka ($1.38) a litre, 95-octane gasoline by 51.7% to 135 taka and diesel and kerosene by 42.5%, the ability, vitality and mineral sources ministry mentioned in an announcement.

The gasoline worth improve was inevitable given world market circumstances, the ministry added, noting state-run Bangladesh Petroleum Company had incurred a lack of greater than 8 billion taka ($85 million) on oil gross sales within the six months to July.

“The brand new costs won’t appear tolerable to everybody. However we had no different selection. Folks should be affected person,” Nasrul Hamid, state minister for energy, vitality and mineral sources, advised reporters on Saturday.

He mentioned costs can be adjusted if world costs fall.

“It was vital however I by no means imagined such a drastic hike. I do not know whether or not the federal government is fulfilling the prerequisite to have an IMF mortgage,” a authorities official mentioned.

Terming the federal government’s transfer as ‘rubbing salt within the wounds’, foremost opposition Bangladesh Nationalist Social gathering (BNP) Secretary Basic Mirza Fakhrul Islam Alamgir mentioned the hike would have a horrible influence on the financial system.

Bangladesh’s inflation price has been above 6% for 9 consecutive months, and hit 7.48% in July, placing stress on poorer households to satisfy their day by day bills and elevating the danger of social unrest.

“We’re already struggling to make ends meet. Now that the federal government has raised gasoline costs, how will we survive?,” mentioned Mizanur Rahman, a personal sector worker.

The federal government final raised diesel and kerosene costs by 23% in November which in flip prompted a virtually 30% rise in transport fares.

World oil costs have eased from their highs in latest weeks and closed on Friday at their lowest ranges since February, rattled by worries a recession may hit gasoline demand. [O/R]

Benchmark Brent crude futures fell beneath $95 per barrel on Friday, down from a peak of $133.18 in March.

Amid dwindling overseas change reserves, the federal government has taken a sequence of measures, together with inserting curbs on luxurious items imports and on gasoline imports together with liquefied pure gasoline (LNG) and shutting diesel-run energy crops because it resorted to recurring energy outages.

The nation’s overseas change reserves stood at $39.67 billion as of Aug. 3, adequate to cowl solely about 5 months of imports and down from $45.89 billion a 12 months earlier.

($1 = 94.4400 taka)

(Reporting by Ruma Paul; enhancing by Jason Neely and Christina Fincher)