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Download PDF The inflation rate on point-to-point basis decreased by 0.23 percentage point and stood at 8.05 percent in May of the last fiscal year due mainly to stable prices of rice in the local market.
However, there has been a rise in inflation of the non-food items since April and the trends continued in May.
According to the Bangladesh Bureau of Statistics (BBS) data, the inflation rate reached an eleven-year high in rural areas as it rose by 0.32 percentage point to be 8.15 percent in May.
That in urban areas was 6.78 percent in May and 6.09 in April.
The recent trends of higher inflation on non-food items began in last April.
The rising petroleum prices caused a record increase of inflation on non-food items as it has affected the transport cost.
The rate of increase in prices of food items came down by 0.63 percentage point to 8.35 percent in May from 8.98 percent in April, according to the BBS data.
On the other hand, that of non-food items rose by 0.42 percentage point in May to reach 7.77 percent from 7.32 percent in April.
A source in the BBS said prices of rice usually determine the inflation rate that decreased slightly in May due to stable rice price.
According to a Trading Corporation of Bangladesh (TCB) report released yesterday, prices of rice have been stable over the last one month.
Earlier on Wednesday, the International Monetary Fund (IMF) released a report titled ‘Inflation Dynamics in Bangladesh’. There has been an upward trend in price increases since 2001. Inflation increased from 1.9 percent in 2001 to 5.4 percent in 2003 and then crossed the 7 percent mark in March 2007, the report said.
Some local observers say shortage of domestic food production and higher oil prices in the international market are main reasons for the rise in inflation rate.
But the IMF report disagreed with this explanation and said monetary factors and inflation inertia have also played important roles.
It went on saying that broad money growth, private sector credit growth and exchange rate changes too impact on inflation.
“Domestic food production and international oil price change are not shown to have a significant impact,” the report said.
The IMF suggested that if the Bangladesh Bank adopts a contractionary monetary policy by tightening broad money or private credit to lower inflation.
However, the central bank officials said contractionary monetary policy would have adverse effect on the country’s industrial production.
“We will rather take a balanced monetary policy,” observed an official of the bank.
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