Inflation drops on point-to-pointbasis, rises on CPI gauge in Oct

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Siddique Islam The country's inflation as measured by consumers' price index (CPI) increased slightly further in the month of October on annual average basis, but declined point-to-point, officials said Monday. The rate of inflation dropped by 0.55 percentage point in October 2011 on the point-to-point basis compared to that of the previous month because of the declining prices of food items. The point-to-point inflation rate slightly eased to 11.42 per cent in October from 11.97 per cent in September last, according to Bangladesh Bureau of Statistics (BBS) data. "The inflation on point-to-point basis declined slightly in October over the previous month due mainly to a seasonal impact," Director General of the Bangladesh Institute of Development Studies (BIDS) Mustafa K Mujeri told the FE. The food price inflation came down to 12.82 per cent in October last from 13.75 per cent a month back, while non-food items' price rose to 9.05 per cent from 8.77 per cent on the point-to-point basis. Mr Mujeri, also a former chief economist of the central bank, noted that the existing downward trend of inflation on point-to-point basis might continue in the coming months. "The inflation on point-to-point basis may ease further in the near future as the new crop will lessen food inflationary pressure on the economy," he said. On the other hand, the rate of annual average inflation went up by 0.39 percentage point in October this year over that of the previous month mainly because of the increased prices of both food and non-food items. "We expect that the inflationary pressure on the economy may ease by the end of this calendar year after arriving of new 'aman' crop," Mr. Mujeri said, adding that the rate of inflation on annual basis might ease if the existing downward trend of inflation on point-to-point basis continued in the near future. The inflation rate moved up to 10.18 per cent in October from 9.79 per cent in the previous month on annual average basis, the BBS data showed. The food price inflation rose to 12.69 per cent in October last from 12.32 per cent in the previous month, while the non-food items' price reached 5.58 per cent from 5.73 per cent on annual average basis. The central bank is now observing the overall inflationary trend in the economy closely, a senior official of the Bangladesh Bank (BB) told the FE. "Food prices are still the dominating factor in the country's overall CPI inflation," he said, adding that the declining trend in prices of rice and vegetables in the local market had contributed to ease inflationary pressure on the economy in the month of October. "We've used monetary instruments through increasing the policy interest rates recently to curb inflationary pressure on the economy," the BB official noted. He also said, "Such policy interventions do not work immediately, but they will involve some time-lapses for the expected impact, due to a weak monetary transmission channel in Bangladesh.