Oct inflation declines to 8-month low

Inflation slipped seven basis points to an eight-month low of 5.47 percent in October, helped by a decline in the prices of non-food items.

Non-food inflation fell 47 basis points to 5.45 percent last month from September. Food inflation, however, rose 19 basis points to 5.49 percent, according to state-run Bangladesh Bureau of Statistics (BBS). In September, overall inflation stood at 5.54 percent.

Planning Minister MA Mannan, while releasing the monthly inflation data at the auditorium of the National Economic Council, credited the decline in inflation to the fall in prices of winter vegetables, fish and fruits.

“It is pleasing that inflation went down in October despite the hike in the prices of onion.”

The prices of onion, a key cooking ingredient, surged in September after traders hiked rates following a ban on export of the vegetable by India, the main source for Bangladesh.

On September 13, the Indian government set a minimum export price of $850 per tonne for onion, prompting the retail prices in Dhaka to soar 25 percent to Tk 55-70 per kg overnight.

Then on September 29, India announced a ban on onion export with immediate effect, causing the prices to shoot up further in Bangladesh.

On October 29, onion prices stood at Tk 105-120 a kg, according to state-run Trading Corporation of Bangladesh.

In October, the prices of vegetables such as bean, radish and green papaya went down slightly from the previous month because of increased supply, the BBS said.

Overall inflation in rural areas fell five basis points to 5.36 percent in October, driven by a 46-point fall in non-food inflation.

Urban inflation declined to 5.67 percent from 5.80 percent, again aided by 52 basis point-fall in non-food inflation to 6.09 percent.

Food inflation in urban areas rose 21 basis points to 5.31 percent.

The decline in wage growth from 6.51 percent to 6.38 percent in October also contributed to the decrease in the overall inflation.

The demand for labour fell in agriculture and construction sectors when compared with a month earlier.

The government has targeted a 5.5 percent inflation rate for this fiscal year.

It was able to contain it at 5.48 percent last fiscal year, comfortably below the target of 5.6 percent.