January 2013: Small decrease in Inflation

Even though the non-food inflation has maintained it place at 9.09 percent, the general inflation has changed quite significantly from 0.52 to 6.62 percent this January. Although the fall of inflation rate failed to achieve the pre-targeted rate (7.5) set by the govt. in the current financial year, FY 2012-2013; it has achieved a very close fall of inflation rate of 7.38 this year.

According to information provided by the Bangladesh Bureau of Statistics (BBS), the yearlong average as per the ’95-’96 baseline is still maintained at a rate of 8.4 percent. The month- month food inflation for dec’12 – Jan’13 however has raised up to 1.05 percent essentially due to rise of the basic food products such as fish, eggs, rise, lentil, atta etc. The non-food inflation has also rushed itself up to a point of 1.08 percent when considered in a month to month basis.

Inflation on monthly basis has risen mainly due to the alterations in energy prices. This has caused a raise in the price of fuel leading to rise transportation cost thus directly resulting in raise of both food and non food inflation. This chain begin when the govt. increased the price of energy by 12 percent approx. which was done to compensate for the losses of the state own Bangladesh Petroleum Corporation (BPC).

The rise of energy and inflation caused by it was mainly compensated by the fall of food prices that decreased the point to point inflation. Good harvest of vegetables and paddy is a great contributory factor in this case.

As per information provided by BBS, the decrease in inflation has been quite consistent this year compared to the previous fiscal year. The bearer information also included point to point national wage index (NWI); that has a rise of 15 percent and over this year.

Point to point food and non-food inflation under the previous year’s base was 7.21% and 7.79% in January against 7.33% and 8.43% in December respectively. This year however the scenario has changed and the current position of under new base has been recorded at 5.02% and 9.09% this January against 5.28% and 10.03% in December respectively.