Food inflation up despite fall in CPI

FE Report

The country's food inflation increased despite a fall of the overall consumers' price index (CPI) on point-to-point basis in September over that of the previous month.

Food prices may continue to rise until December this year that would have an impact on the overall CPI, officials and economists said.

The food inflation rose to 4.98 per cent in September from 4.93 per cent in August on point-to-point basis mainly due to rise in the prices of essential items including rice and sugar during the period.

"Food prices are still influencing the country's overall CPI inflation," a senior official of the Bangladesh Bank (BB) told the FE Saturday, adding that the inflationary pressures on economy might ease in January next year following seasonal effects.

"Food price inflation had started moving up from the first month of this fiscal and is still maintaining the trend," an economist told the FE, preferring anonymity, adding that the food price inflation was 3.46 per cent in July this year.

Despite good harvest of rice, recent surge in domestic prices of essential commodities including rice, sugar, edible oil, pulses, onion, garlic and vegetables is the reason, for higher inflation in the first quarter of current fiscal, he added.

The central bank said in its latest quarterly report that the upturn in inflation may continue in the coming months mainly because of the increasing trend in international prices of petroleum, rice, sugar and other commodities; liquidity overhang in the domestic financial market may also add to inflationary risk if used by banks in excessive expansion of consumer credit.

The country's CPI inflation came down to 4.60 per cent on point-to-point basis in September from 4.69 per cent of the previous month following decline in prices of non-food items, according to the Bangladesh Bureau of Statistics (BBS) data.

The non-food prices inflation stood at 4.28 per cent in September compared with 4.54 per cent in the previous month, the BBS said.

However, the pressure of prices in urban areas was higher than in rural areas.

The general inflation in urban areas stood at 6.15 per cent in the month of September while that in rural areas at 3.99 per cent on point-to-point basis, the data showed.