Inflation at seven-month high in June

The point-to-point inflation rate in June went up by 0.67 percentage points to 6.02 per cent, a seven-month high, due to a significant jump in the urban consumer price index (CPI), official data showed on Monday.
The inflation rate in the urban areas swelled by 1.20 percentage points to 6.03 per cent last month (June) from that of 4.81 per cent in May, the Bangladesh Bureau of Statistics (BBS) data showed.
Meanwhile, the 12-month average inflation rate was also recorded higher to 6.5 per cent in the last fiscal year (FY), 2019-20, following the significant jump at the year-end, the BBS data showed.
The average inflation was higher than the government target of 5.50 per cent for the last FY. In the previous FY, the average inflation was recorded at 5.48 per cent.
The BBS Director General Md Tajul Islam told the FE on Monday that higher rice prices and supply chain disruption due to flood and rainfall were the major reasons behind rise in inflation in June.
He said transportation cost was also showing a higher trend, which prompted price hike of some essential items, resulting in higher CPI.
Research Director of the Centre for Policy Dialogue (CPD) Dr K G Moazzem told the FE that if the flood prolongs and disruption in smooth supply system continues, inflation could be even higher in the coming months.
Meanwhile, the FE analysis has found that the 6.03 per cent point-to-point inflation rate in June was the record high after six months since November 2019. In last November, the inflation was recorded at 6.05 per cent.
According to the BBS, the food inflation on point-to-point basis jumped by 1.45 percentage points to 6.54 per cent in June from that of 5.09 per cent in May.
Among the highly weighted products, the CPI of food, beverage and tobacco increased by 1.32 per cent to 297.95 last month from that of 294.08.
The BBS in its statistics showed that the average price of najirshail/miniket rice was Tk 65.50 per kg, paijam/eqivalanet rice Tk 63.11 per kg, IRRI/boro rice Tk 48.55 per kg, and wheat price was Tk 40 in the markets of Dhaka city in June.
The average rice prices were Tk 65, Tk 62.50 and Tk 48 per kg respectively, and the wheat price was Tk 40 per kg in May.
The prices of vegetables were also higher last month than the previous month, the BBS statistics showed.
Meanwhile, the non-food inflation on point-to-point basis dropped to 5.22 per cent in June from that of 5.75 per cent in May, the BBS data showed.
The FE analysis has found that CPI in noon-food increased by 0.45 per cent to 248.87 in June from that of 247.75 in May.
Among the noon-food items, prices of products like fuels, lightings and clothings increased last month compared to the previous month.
The urban inflation ballooned to 6.03 per cent in June from that of 4.81 per cent in May, mainly due to a big jump of food CPI in cities.
The food inflation in the city areas swelled by 2.78 percentage points to 6.72 per cent last month from that of 3.94 per cent in May.
However, the non-food inflation fell to 5.27 per cent in June from 5.79 per cent in May.
According to the BBS data, the point-to-point inflation in rural areas also increased to 6.02 per cent in June from that of 5.65 per cent in May.
The food inflation in villages was 6.47 per cent in June from that of 5.61 per cent in May.
The non-food inflation in rural areas decreased to 5.27 per cent last month from that of 5.79 per cent in the previous month.
Dr. Moazzem said if the government cannot ensure smooth supply chain management amid the coronavirus pandemic and the flood in the northern Bangladesh, inflation might boost further in the coming months.
He suggested continuing OMS and other social safety net programmes for vulnerable groups of people as well as ensuring a better supply chain management in the coming days.
After the Executive Committee of the National Economic Council (ECNEC) meeting on Monday, Planning Minister M A Mannan told reporters that inflation increased in June due to supply chain disruption along with the damage of vegetables and other crops for the flood and rainfall.
He hoped that the inflation rate will ease in the coming months.

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