Food inflation tumbles to 42-month low in February | The Daily Star
12:00 AM, March 04, 2020 / LAST MODIFIED: 01:43 AM, March 04, 2020

Food inflation tumbles to 42-month low in February

Food inflation fell to a 42-month low of 4.97 per cent in February, helped by easing off pressures on some items such as rice and onions in recent months, official figures showed yesterday.

As a result, overall inflation dropped to a 12-month low of 5.46 per cent last month, according to data from the Bangladesh Bureau of Statistics (BBS).

"This is a good piece of news," said Planning Minister MA Mannan, while releasing the monthly figures of the Consumer Price Index (CPI) at the planning ministry in Dhaka.  

It was apprehended that inflation might go up in February because of social events such as picnics and weddings. But the supply side was uninterrupted while the price of onion declined, he added.

In February, food inflation was down 15 basis points from a month earlier and non-food inflation, which encompass average prices of clothing and footwear to transport and communication, dropped seven basis points to 6.23 per cent.

Together, the two contributed to the 11 basis point-fall in overall inflation. Food inflation was the lowest since September 2016.

Overall, inflation was the lowest since March last year and was slightly below than the Bangladesh Bank target for the current fiscal year. In January, inflation stood at 5.57 per cent.

Following volatility in prices of some food items such as onions towards the end of last year and some pressure on rice prices, food prices overall appear to have been relatively stable in February. 

"Food supply chains did not suffer any major disruption. Weak private sector credit growth may also have helped.  However, non-food inflation is high," said Zahid Hussain, a former lead economist of the World Bank office in Dhaka.

There is a risk of rising food and non-food inflation due to the direct and knock-on effects of the recent increase in electricity prices, disruption of import supply chain, from China in particular, because of the coronavirus and increased demand as Ramadan approaches.

"The Bangladesh Bank has taken some measures to ensure the adequacy of the supplies of essentials. Their vigilance must continue," he added.

At a time when people are grappling with high prices of many daily essentials, the government recently hiked the power tariff by 5.3 per cent. The new rate will take effect from Sunday.

In rural areas, inflation slid eight basis points to 5.44 per cent, helped by seven basis points fall in food inflation and 10 basis points decline in non-food inflation.

In urban areas, general inflation was down 19 basis points to 5.48 per cent, aided by 33 basis points slip in food inflation and five basis points down in non-food inflation. 

It appears that the prices of vegetables such as potato, eggplant, carrot, cucumber, tomato, radish, cauliflower, cabbage and red spinach and spices such as onions, garlic and ginger fell in February compared with January, according to a press release of the BBS.

The non-food inflation fell last month after soaring 6.30 per cent in January, the highest since December 2015.

The statistical agency calculates CPI based on the prices of 318 goods and services in rural areas and 422 commodities in urban areas. It computes the CPI at the national level by combining the urban and rural indices using weight factors.

The overall growth of nominal wages was 6.51 per cent, down from 6.56 per cent in January, the BBS said.

The wage in the manufacturing and services sectors was slightly up at 6.14 per cent and 6.52 per cent, from 6.15 per cent and 6.52 per cent respectively, while that in the agriculture sector fell to 6.65 per cent from 6.74 per cent a month ago.

However, the wages in agriculture, manufacturing and services sectors grew at a higher pace than inflation, according to BBS's Wage Rate Index.

The government has targeted a 5.5 per cent inflation rate in the current fiscal year. It was able to contain it at 5.48 per cent last fiscal year, which is comfortably below the target of 5.6 percent. 

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