According to the Bangladesh Bureau of Statistics (BBS) figures, food price inflation was recorded at 9.48 percent in September 2004 compared with 1.94 percent in June 2001-02, 5.22 percent in June 2002-03 and 6.64 percent in June 2003-04. The overall inflation rate of 7.35 percent in September rose sharply to 7.92 percent in October 2004.

The increased food prices are in part ascribable to flood-induced poor Aman harvests over which, of course, we had little control; but these are also in part due to shortfalls linked to import and earlier internal procurement drives where man-made factors were involved. One has to grant though that the cost of imported rice escalated infusing a modicum of imported inflation into the overall inflationary trends.

At any rate, the knock-on effects are being palpably felt in certain areas. Food constitutes 80 percent of the consumption basket for the rural poor. The soaring rice prices are, therefore, hurting the poor in terms of sheer nutritional intake. As the rice costs more, the demand for other consumer items is forced on a tailspin. Faced with the prospect of any further slump in demand, the industrialists are likely to put a brake on production, not to speak of the higher cost of production which has its dampening effect on productivity.

The factors other than food price that can fuel inflation will have to be closely monitored and countervailing policy measures taken wherever necessary. If the taka continues to weaken against the dollar, the import prices keep soaring and we increase the petroleum prices, further inflationary pressure is bound to build on the economy.

At a time like this, we can think of cost cutting measures in the government and public sector and stepping up of productivity aimed at strengthening the supply side of the economy by generous grant of bank credits as being the best options available to the government.