Inflation slips to 20-month low
Inflation came down to a 20-month low of 6.84 percent in September, giving hope to the government of meeting this fiscal year's target.
Good rice production and low interest and exchange rates account for the slide. Inflation was 6.91 percent in August.
“It is a change in the right direction,” said Zahid Hussain, a lead economist at the World Bank.
Planning Minister AHM Mustafa Kamal welcomed the latest inflation data, adding that it puts the government in good stead of meeting fiscal 2014-15's target for 6.5 percent.
Hussain, too, said the inflation trend is on track to achieving the 6.5 percent target by the end of the year.
Both the food and non-food inflation fell last month: food inflation by four basis points to 7.63 percent and non-food 13 basis points to 5.63 percent from the previous month, according to the Bangladesh Bureau of Statistics.
The WB economist said food prices have been stable because of good boro harvest and stable international prices. Non-food inflation has also stabilised for the steady supply chain and exchange rate as well as prudent monetary management.
Rice production edged up to a new high last fiscal year for favourable weather and a more balanced use of fertilisers. Net rice production in fiscal 2013-14 stood at 3.56 crore tonnes riding on a record boro output, up 1.42 percent from the previous year. Boro yield rose 1.6 percent year-on-year to 1.9 crore tonnes last fiscal year, according to a recent estimate by BBS. Alongside, the import of food grains increased to 30 lakh tonnes in fiscal 2013-14, which was around 19 lakh tonnes in the previous year.
A Bangladesh Bank official said due to a good production and stock in the government silos, the price of rice is much lower now.
Rice price yesterday was 10 to 15 percent cheaper than on the same day last year, according to the Trading Corporation of Bangladesh.
The fall in interest rate on bank loans and exchange rate also had a downward impact on overall inflation.
In July, the average lending rate was 12.84 percent, in contrast to 13.63 percent a year ago, according to BB.
On October 8, the average exchange rate against the dollar was Tk 77.4, which was Tk 77.75 a year ago.
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