Bangladesh hikes fuel prices, could lead to inflation

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Bangladesh hikes fuel prices, could lead to inflation

DHAKA, Bangladesh: Fuel prices have been raised by some 50 percent this week, aimed at reducing the country's subsidy burden, but could cause inflation to rise, which is already at over 7 percent.

The Russian-Ukraine war has inflated the South Asian country's import bill, forcing the government to ask for loans from the International Monetary Fund and other global agencies.

In a statement, the power, energy and mineral resources ministry said gas prices in the country increased by 51.2 percent, 95 octane gasoline by 51.7 percent, and diesel and kerosene by 42.5 percent.

The ministry added that the fuel price increase was unavoidable due to global market conditions, and that the state-owned Bangladesh Petroleum Corporation lost more than $85 million on oil sales in the six months ending in July.

Nasrul Hamid, state minister for power, energy and mineral resources, told reporters: "The new prices will not seem to be tolerable for everyone." We had no other choice. People have to be patient. The hike would have a negative effect on the economy, according to the opposition's secretary general, Mirza Fakhrul Islam Alamgir.

We are struggling to make ends meet. How will we survive now that the government has raised fuel prices? Mizanur Rahman, a private sector employee, was quoted by Reuters.

With worries of a recession sparked by fuel demand, global oil prices have retreated from their highs in recent weeks and closed at their lowest level since February.

The Bangladeshi government has taken a series of measures, including banning fuel imports, liquefied natural gas and closing diesel-owned power plants to counter dwindling foreign exchange reserves, in order to counter dwindling foreign exchange reserves.

As of 3rd August, the country's foreign exchange reserves were $39.67bn, which covers only about five months of imports, although it has decreased from $45.89bn a year earlier.