Inflation edges down in July
08 August, 2018
Inflation fell slightly to 5.51 percent in July due to a cut in non-food prices, much to the cheer of the central bank.
Last week, the Bangladesh Bank announced an unchanged monetary policy for the second half of the year, drawing criticism from analysts that it would not be able to combat the inflationary pressure.
“This year, the government would be successful in achieving its inflation target of 5.5 percent,” said Planning Minister AHM Mustafa Kamal, while unveiling July's inflation figure yesterday.
Kamal attributed the 3 basis point decline in inflation to the stable prices of various consumer items in the international market.
The taka did not depreciate that much against the dollar, which resulted in the non-food inflation decreasing.
In July, food inflation increased 20 basis points to 6.18 percent. In the previous month, it had fallen 58 basis points to 5.98 percent.
The spiralling prices of egg and onion, an essential cooking ingredient, caused the food inflation to edge up slightly, said Abul Kalam Azad, director of the Bangladesh Bureau of Statistics.
However, non-food inflation declined 62 basis points to 4.49 percent in July. In June, it had surged 79 basis points to 4.87 percent in June.
Overall Inflation is stable due to stability in both food and non-food inflation, said Zahid Hussain, lead economist of the World Bank's Dhaka office.
“However, there are pressures on prices. Inflation in urban areas remains very high and it increased in July rather significantly due largely to an increase in food inflation.”
Restoration of the 28 percent duty on rice imports contributed to the increase in domestic rice prices in July, while bad weather disrupted internal supply chains, he said.
“Exchange rate depreciation in July may also have fuelled inflation somewhat.”
Adherence to the monetary policy targets announced recently and ensuring smooth functioning of the domestic supply chains will be important for keeping inflation within the target set for fiscal 2018-19.
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