Flawed market management blamed for soaring inflation

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FE Report
An expert committee has held flawed market management, lack of businesses confidence and insufficient buffer stock responsible for the soaring inflation that has put the country's macro-economy under challenge, official sources said.
The Consultative Committee on Economic Policies, Management and Reform in its first meeting last month said a poor market monitoring system and a lack of business confidence have resulted in serious interruptions in the supply chain.
Moreover, inaction by the authorities concerned in maintaining a sufficient buffer stock and the high price of the staple food in the global market have cast an uncertainty over the country's food security leading to buildup of the inflationary pressure, according to the sources.
The point-to-point inflation soared to 11.52 per cent in December last, the all-time high in the country in more than a decade.
The inflationary pressure has become a major worry for the present caretaker government (CG) since its takeover in January 2007.
During the first half of the current fiscal, the point-to-point inflation hovered over the double-digit mark excepting in October when the inflation was 9.6 per cent.
This has forced the central bank to make an upward revision of the general inflation to 9.0 per cent from initial projection of 7.0 per cent.
Presided by Finance and Planning Adviser Mirza Azizul Islam, the meeting was attended by the committee members including Rehman Sobhan, Wahiduddin Mahmud, Sultana Kamal, Mohammad Farashuddin, Hafiz GA Siddique, Kazi Shahbuddin and the central bank governor.
To keep the inflation at a tolerable level, the meeting recommended maintaining a sufficient supply of foodgrains, especially rice, to keep the local market stable.
It also laid emphasis on smooth supply of fertiliser, electricity and diesel to achieve the higher target of boro rice production in the current season.
The experts pinned high hopes on increasing the local Boro production to recoup the loss of about 1.4 million tonnes of rice caused by the two successive floods and the devastating cyclone Sidr, which hit the country last year.
They also suggested that the government extend the duration and the quantity of rice per head being sold in the open market and expansion of different activities under the social safety net.
The committee also focused on the subsidy situation and suggested that the government raise the prices of fertiliser and gas to ensure smooth fiscal management.
It, however, said the government should consider the matter of marginal farmers and make an alternative arrangement for them while re-adjusting the prices of the fertiliser and gas.