However, it has been rising in the case of non-food items since April and the trend continued in May.

According to the Bangladesh Bureau of Statistics (BBS) data, inflation reached an eleven-year high in rural areas as it rose by 0.32 percentage point to be 8.15 percent in the penultimate month of the last fiscal.

That in urban areas was 6.78 percent in May and 6.09 in April.

The recent trends of higher inflation on non-food items began in last April.

The non-food items have seen a record rise in inflation as soaring petroleum prices continued raising the transport cost.

The rate of increase in the prices of food items fell by 0.63 percentage point to 8.35 percent in May from 8.98 percent in April, according to the BBS data.

On the other hand, that on non-food items rose by 0.42 percentage point in May to reach 7.77 percent from 7.32 percent in April.

A source in the BBS said prices of rice usually determine the inflation rate that decreased slightly in May due to stable rice price.

According to a Trading Corporation of Bangladesh (TCB) report released yesterday, prices of rice have been stable over the last one month.

Earlier on Wednesday, the International Monetary Fund (IMF) released a report titled 'Inflation Dynamics in Bangladesh'. There has been an upward trend in price increases since 2001. Inflation increased from 1.9 percent in 2001 to 5.4 percent in 2003 and then crossed the 7 percent mark in March 2007, the report said.

Some local observers say shortages of domestic food production and higher oil prices in the global market are the main reasons for the rise in inflation.

But the IMF report disagreed with this explanation and said monetary factors and inflation inertia have also played important roles.

Besides, broad money growth, private sector credit growth and exchange rate changes impact on inflation, it continued.

"Domestic food production and international oil price change are not shown to have a significant impact," the report said.

The IMF suggested that the Bangladesh Bank (BB) adopt a contractionary monetary policy by tightening broad money or private credit to lower inflation.

However, the central bank officials said contractionary monetary policy would have adverse effect on the country's industrial production.

"We will rather take a balanced monetary policy," said a BB official.