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Friday, October 07, 2005

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HEADLINE
 
Official inflation rate reaches five-year record high at 8pc
Shakhawat Hossain
10/7/2005
 

          The inflationary rate, propelled mainly by higher prices of fuel and food, reached nearly eight per cent in
the 12-month period up to August, 2005.
The soaring prices of food and fuel and the rise in house rent and transportation fare pushed the point-to-
point inflation up to 7.98 per cent in August, surpassing the previous five-year high of 7.92 per cent
recorded in September 2004.
The impact of the rising prices of essentials led to the rise in the core inflation rate by more than one per
cent within four months -- between May and August -- of the current calendar year, the finance ministry
sources said.
The inflation rate, calculated on the basis of the consumer price index (CPI) by the Bangladesh Bureau of
Statistics (BBS), was 5.53 per cent during the same period a year ago.
The food price inflation rose to almost 9.4 per cent on a point-to-point basis in August from 9.18 per cent in
July.
The non-food price inflation rate that stood at 5.47 per cent in July on a point to point basis reached 5.78
per cent in August, the sources added.
The inflation data of the month of August was recently submitted to the finance ministry for approval.
The BBS will be able to make the data public only after the approval by the ministry.
Experts said the inflation rate, estimated on the basis of CPI with its base year 1995-96=100, would have
been much higher, had not the index been confined to about 1200 consumer products.
Experts and international donor agencies fear the rate of inflation might cross the double-digit mark due to
the latest price hike of petroleum products.
The government had to raise the prices of kerosene and diesel by 13 per cent in two phases -- first on May
24 and then on May 28. For the third time in September last, the hike was 17 per cent for petrol and octane
due to the abnormal rise in the prices of petroleum products in the international markets.
Many analysts of the price situation, however, maintain that the inflationary rate has already crossed the
double digit mark.
Finance ministry officials say they are not worried over the current high inflation rate. It will be a concern
for them only if the inflation crosses the double-digit, according to such officials.
The government signalled last March for pursuing a contractionary monetary policy at the advice of the
donor agencies.
Taking the cue from this signal, the central bank initially raised the cash reserve requirements (CRR) for
commercial banks and later advised the banks to raise their lending rates with a view to restricting credit
flows.
However, the contractionary monetary policy by the government has not succeeded in abating the upward
price pressures. Despite the continuation of this monetary policy, the CPI inflation has risen by 1.36 per
cent on a point-to-point basis since April.

 

 
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