CPI inflation up on one basis, down on another

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FE Report
The Consumers' Price Index (CPI) inflation increased slightly further in March on the annual average basis but declined on point-to-point, officials said.
The rate of annual average inflation went up by 0.31 percentage point in March this year over that of the previous month mainly because of the increase in prices of food items.
"The upward trend of annual average inflation is likely to continue in the near future and exceed the budgetary target by the end of this fiscal year," Director General of the Bangladesh Institute of Development Studies (BIDS) Mustafa K Mujeri told the FE Sunday.
The US-based Citigroup has forecast that the 12-month average CPI inflation might exceed the budgetary target and hit 7.0 per cent by the end of 2009-2010 (FY10).
Mr Mujeri, also a former chief economist of the central bank, sees that the existing downward trend of inflation on point-to-point basis may continue in the fourth quarter of the current fiscal year due to arrival of new 'boro' crop.
"The impact will be short-term," he said adding that the inflation on point-to-point basis would ease during the April-June period, as the new crop would lessen food inflationary pressure on the economy.
The inflation rate moved up to 6.26 per cent in March from 5.95 per cent in the previous month on the annual average basis, according to Bangladesh Bureau of Statistics (BBS) data, released Sunday.
The food price inflation rose to 6.71 per cent in March last from 6.2 per cent in the previous month while the non-food items price came down to 5.68 per cent from 5.73 per cent on the annual average basis.
On the other hand, the point-to-point inflation rate slightly eased to 8.78 per cent in March from 9.06 per cent in February last, the BBS data showed.
The rate dropped by 0.28 percentage point in March 2010 on the point-to-point basis compared to that of the previous month because of the declining prices of both food and non-food items.
The food price inflation came down to 10.80 per cent in March last from 10.93 per cent a month back while non-food items price dropped to 5.60 per cent from 6.14 per cent on the point-to-point basis.
"The inflationary pressures on the economy may ease in the coming months on pint-to-point basis due to a seasonal impact," a senior official of the Bangladesh Bank (BB) told the FE.
He also said the point-to-point calculation of the CPI is always volatile because of seasonality but the 12-month average is less volatile due to its seasonal adjustment.