The Bangladesh Bank has expressed cautious optimism that its own policy initiatives coupled with that of the government would help ease inflation in the coming months.
It says there was a slight drop in the contribution of import-concentrated items in March 2024, cooled by price drops of commodities on the international market.
The Bangladesh Bank has found such picture in an analysis of inflation data for the first quarter (January-March) of this calendar year (2024), revealed Thursday.
The central bank has blamed higher global commodity prices as a key reason for the inexorable inflation in Bangladesh, touching double-digit highs.
"When the local currency becomes weaker, the imported goods become costlier that leads to a rise in the rate of inflation," the analysis report says.
It notes that the food inflation during the January-March quarter was mostly driven by the protein-based food items, spices and other culinary essentials.
And the non-food inflation was induced by energy inflation-fuelled by higher tariffs of gas, power, fuel oils and so.
Inflation remained elevated at around 10 per cent during January-March 2024, in the wake of price rises.
The central-bank findings show the contribution of perishable items to inflation emerged significantly in 2023 and remained steady during the first three months of 2024.
Its analysis of wage trends indicates a potential decline in real income for consumers, as inflation had outpaced wage growth since April 2022 and stayed on the negative territory at the end March 2024.
While certain regions, notably Rangpur, exhibit positive wage growth, concerns arise over the slowing momentum.
The central bank alerts that the higher inflation is a challenge for the Bangladesh economy.
Monetary and fiscal policies have prioritized the containment of inflationary pressure, it has mentioned. In addition to continuous increases in the monetary policy rate (repo rate) to reduce inflationary pressure, BB has stopped lending to government by increasing reserve money.
Also mentioned is that the government has implemented a variety of austerity measures to ensure effective fiscal management.
"Looking ahead all of the policy initiatives implemented by the Bangladesh Bank and the government aim to anchor inflation expectations."
In the end, the BB appears cautiously optimistic that all this would have a positive impact on inflation outcomes in the months ahead.
jasimharoon@yahoo.com