Govt looks to keep inflation rate at 5.8pc in next fiscal

Siddique Islam | Published: May 25, 2016 00:00:00 | Updated: February 01, 2018 00:00:00

Despite some risk factors, the government is likely to keep the inflation rate at 5.8 per cent in the upcoming fiscal year (FY) 2016-17.
The inflation target was estimated considering the existing prices of essential commodities including petroleum products in the global market, a senior official familiar with the budget preparations told the FE on Tuesday.
Earlier, the 'confidential' projection was discussed at a fiscal coordination council meeting chaired by Finance Minister AMA Muhith, he added.
"We're hopeful of bringing down the rate of inflation to 5.8 per cent by the end of the FY 2017 from the existing level if a favourable natural environment and a stable political situation continues," the official explained.
Implementation of the pay scale for the government employees was seen as a risk factor, the official said, adding that it might create pressure on inflation in future.
He also listed possible volatility of fuel prices in the international market as a risk factor. Â
The country's inflation as measured by the consumer price index (CPI) decreased further in the month of April on an annual average basis mainly because of fall in prices of food items.
The inflation rate came down to 6.04 per cent in April 16 from 6.10 per cent of the previous month on a 12-month average basis, according to the Bangladesh Bureau of Statistics (BBS) data. It was 6.15 per cent in March 2016.
On the other hand, the inflation rate also fell to 5.61 per cent during the period under review from 5.65 per cent in March last on the point-to-point basis following the declining trend in both food and non-food items.
"Point-to-point non-food CPI inflation decreased to 8.34 per cent in April 2016 from 8.36 per cent in March 2016, mainly on gross rent, fuel and lighting, furniture, household equipment and operation, medical care and health expenses, transport and communications, and miscellaneous goods and services," the Bangladesh Bank (BB) said in a report on monthly inflationary trend, April 2016. Â
The average inflation rate recorded in April 2016 was lower by 0.16 percentage point than the annual target of 6.20 per cent, set by the government in the national budget for the FY 16.
However, core CPI inflation rose to 7.73 per cent in April 2016 from 7.51 per cent a month ago on the 12-month average basis, according to the BB report.
On the other hand, the core CPI inflation came down to 8.87 per cent in April last from 8.88 per cent in March last on point-to-point basis.
The central bank is measuring the core inflation which excludes non-food and non-fuel components from the CPI.
"We're watching closely the recent trend in core inflation," the BB official said without elaborating any further.
siddique.islam@gmail.com