4:42 pm - Wednesday January 18, 1139

Dec inflation eases, but could pick up again on unrest

Bangladesh’s annual inflation in December eased for a fifth straight month to its lowest level in more than two years, but price pressures could climb again on renewed political unrest.

inflationThe consumer price index in December fell to 6.11 percent from a year earlier, the lowest since October 2012, from 6.21 percent in November, officials at the Bangladesh Bureau of Statistics said on Tuesday.

Food prices were 5.86 percent higher than a year earlier in December, lower than November’s 6.44 percent rise. In contrast, non-food inflation picked up to 6.48 percent from 5.84 percent.

Food prices declined on the back of weaker global commodity prices and lower vegetable prices, while non-food inflation has trended up in recent months due to a rise in transportation costs, house rents, education and medical expenditure, a senior bureau official said.

Headline inflation could pick up in coming months, however, as political unrest flares again, threatening supply disruptions.

Bangladesh faced an indefinite nationwide blockage of roads, railways and waterways from Tuesday as the opposition party intensified protests to topple the government.

Four protesters were killed in clashes between activists of Bangladesh’s ruling party and opposition supporters on Monday on the first anniversary of disputed national polls that the opposition party boycotted.

“There is every possibility that inflation will go up again due to ongoing political unrest that would disrupt supplies,” said the bureau official, who asked not to be identified.

Inflation in Bangladesh accelerated to 7.35 percent in the last fiscal year that ended in June, from 6.78 percent the previous year, exceeding a target of 7 percent.

Food prices went up in the last financial year as supplies of basic foodstuffs were affected by frequent transport blockades and unrest in the run-up to elections in January.

The government aims to hold inflation at 6.5 percent in the current fiscal year. The central bank has kept its key policy rates unchanged since February last year, when it cut rates by half a percentage point on a slower economic growth outlook.

In June, however, the central bank raised banks’ reserve requirement ratio by 50 basis points, its first increase since 2010, in a move to mop up excess cash to cool inflationary pressures.

-Business Recorder (Copyright Reuters, 2014)