Bangladesh Bank faces tough task to lower inflation after spike

FE Report | Published: July 11, 2018 09:27:54 | Updated: July 14, 2018 10:29:33


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The central bank may face a challenge to bring down the average annual inflation to 5.6 per cent in the current fiscal year (FY) after it exceeded the target in the last fiscal.

The average annual inflation exceeded the government target of 5.5 per cent in FY 2017-18 mainly due to higher prices of food grains, according to Bangladesh Bank (BB) officials.

Now the BB and other concerned authorities would face a tough task to lower the inflation, they opined.

The inflation rose to 5.78 per cent in FY '18 on the annual average basis from 5.44 per cent a year before, according to the latest data of the Bangladesh Bureau of Statistics (BBS).

The figure was 5.92 per cent in FY '16.

Food inflation stood at 7.13 per cent in FY '18 as compared to 6.02 per cent in the previous fiscal.

On the other hand, non-food inflation came down to 3.74 per cent from 4.61 per cent.

"Prices of food grains, particularly rice, increased significantly in FY '18 following flashfloods and incessant rain in different parts of the country," a senior BB official explained.

The issue is expected to be discussed at today's (Wednesday) preparatory meeting of the next monetary policy with former finance ministers, former governors and senior economists, according to the BB official.

"A BB board of directors meeting will be held in the central bank on Sunday mainly to discuss issues concerning the next monetary policy statement (MPS)," another BB official told the FE.

He also said the BB might make clear its policy measures for curbing the inflationary pleasure on the economy in the upcoming MPS.

"Actually, the inflation depends on different factors, including commodity prices in the global market, weather, overall production and inflationary trend of close-door neighbours," the central banker explained.

On Monday, the BB started preparations for formulating its next MPS.

The BB is giving top priority to curbing the rising trend of inflation and helping the productive sectors achieve maximum economic growth.

siddique.islam@gmail.com

 

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