Inflation inches down to 9.32pc in February

Overall inflation eased in February for a second consecutive month as virtual price deflation of farm produce amid a market glut cooled the rate to 9.32 per cent from 9.94 per cent in January, official statistics show.

The drop was mainly driven by a reduction in food inflation, which stood at 9.24 per cent in February, down from 10.72 per cent in January, according to the latest Bangladesh Bureau of Statistics (BBS) data released Thursday

However, non-food inflation, which measures the cost of goods and services outside agricultural produce, showed an upward trend as yet largely because of what economists say group control of market of many manufactures.

The inflation on account of non-food buys increased to 9.38 per cent in February, up from 9.32 per cent in January.

Economists say the February inflation data are encouraging but not convincing about a turnaround towards a disinflationary path.

Food inflation has declined for two months in a row-as farmers reaped huge harvests but received lowest prices in recent times.

"In fact, data suggest we had food-price deflation in January and February relative to the previous months. This is the encouraging part," says Dr Zahid Hussain, an independent economist of Bangladesh.

Nonfood inflation, however, has increased for a second consecutive month.

Dr Hussain says, "This is the unconvincing part that shows we continue to remain on a slippery slope on inflation."

Nonfood-inflation increase probably reflects the recent VAT-rate increases and increased demand due to booming remittances, he told the FE.

The economist suggests that a tight monetary stance in place has to continue under such circumstances of inflation.

"BB recently reduced the CRR which is not quite consistent with the tight stance. We also need much better monetary-fiscal coordination to fight inflation."

However, rural overall inflation stood higher at 9.51 percent in February while its food inflation little down at 9.15 per cent and non- food as high as 9.85 per cent in the month.

The inflation arithmetic shows farmers sell cheaper and buy dearer on the market, with prices of many winter crops hitting rock bottom.

In the meantime, urban overall inflation reached 9.34 per cent in February while food inflation 9.47 per cent and nonfood 9.27 per cent.

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