The New Nation - Internet Edition

SOARING food prices propelled the overall inflation to a 36-year high of 10.10 per cent on a point-to-point basis, according to a media report quoting the figures released by the Bangladesh Bureau of Statistics in the second week of this month. Food price inflation rose to 11.42 per cent in July last with an urban bias, indicating that the city-focussed interventions helped rather litle to ease market price pressures. Food price inflation, in fact, crept to 9.82 per cent in June from 6.65 per cent in January as the Bureau of Statistics figures mentioned as the urban food prices gained 12.46 per cent in July up from 10.71 per cent in June. Prices of food items rose to 10.97 per cent in rural areas in July compared to 9.11 per cent in June as reported in the media. A note of caution was sounded by economists that the situation 'would aggravate further in the coming days due to lower than expected agricultural output and global commodity market volatility'. At the same time, the economists, according to media report, warned the government saying it would face 'severe problems' until the next budget as food situation does not look good with static local production and supply shortage in the international market

The government rather should continue direct market intervention at least for the next two crop seasons -Aman and Boro. Signs of restoration of business confidence remain bleak due to atitude problems of the business sector as economists opined. In the past businessmen got some illegal benefits and they cannot change their way of doing business overnight According to reports, the net foodgrain production in the last financial year remained almost static at 24.87 million tonnes against 24.54 million tonnes of the preceding financial year. Foodgrain import, in fact, fell to 2.42 million tonnes in the 2006-2007 financial year from 2.56 million tonnes of the year back.

The Finance Adviser on several occasions stressed the need for increased agricultural production to contain inflation and announced a number of measures to keep supply and prices of essential food items stable. Import duties on a number of essentials were withdrawn and the government announced the plan of seting up four wholesale markets in Dhaka and giving easy trade loan to importers. The adviser in this regard mentioned the country's para-military BDR's programme of providing essential commodities at reasonable rates for which the government would double imports of rice and wheat to meet the domestic demand. But none of the planned four wholesale markets in the capital city has yet been set up. Inflation in countries like Pakistan, India and Sri Lanka as a whole is to be considered as the finance adviser in his budget speech had referred to with a view to defending the galloping inflation. But since then inflation in those countries declined while it rose abnormally in Bangladesh. Prices of the commodities would as usual depend on the demand-and-supply theory as economists have said.