The New Nation - Internet Edition

Pulack Ghatack

Price inflation has been continuing to soar over double digit in the country making policymakers worried about unstable macroeconomic situation and possible public backlash.

Skyrocketing food prices, despite bumper cropping of rice and potatoes, has been leading inflation to go up, analysts observed. Figures of the annual consumer price inflation was creeping up to 10.06 per cent in March which was 10.16 percent a month earlier, official data showed.

A senior official at the Bangladesh Bureau of Statistics on Sunday said that a 12.92 percent spike in food prices drove inflation, while prices of non-food items rose 5.63 percent from a year earlier.

A high official of the central bank said that the main challenge for the government now was to curb inflation, which might diminish successes in other areas.

'Other successes matter very little to the people if they do not get food at a reasonable price,' he pointed out.

Claiming that the current macroeconomic position was satisfactory, the senior official of the central bank warned that situation might deteriorate abnormally if inflation was not contained. He warned that inflation would upset the economy if the government failed to reduce supply side pressure.

'The central bank is doing everything to control the demand side pressures on the inflationary trend, but we are helpless against the supply side,' he added. It is the duty of other government agencies and authorities to control supply side pressures stemmed from fragile supply chain management, he said.

The Asian Development Bank (ADB) in its quarterly report yesterday noted that higher international food and non-food commodity prices and shortfall in domestic food-grain production heightened inflation.

Bottlenecks in the distribution and retail management chain, monetary accommodation of previous years, and panic buying also pushed inflation higher, it said.

Price hikes for several commodities in the world market, especially rice, wheat, crude and edible oils, and other essential products has created inflationary pressure in the Bangladesh economy, Bangladesh Bank said in its latest report.

Chief economist of the central bank Mustafa Mujeri, while releasing the quarterly report, termed the inflation rate as 'alarming.' He said, "The fight against inflation has to continue with increasing zeal since persistent pressure, as measured by 12 months moving average, is till evident."

The central bank projected inflation would rise to 8.5 percent against a target for average annual inflation of 6.5-7.0 percent for the current fiscal year to June 2008.

However, BB Governor Dr Salehuddin Ahmed at a function on Saturday said high inflation would not put strains on consumers if the purchasing power of people could be strengthened.

"Many countries faced up to 40 percent inflation but they did not have much problem. But 10 percent inflation turned out to be a matter of concern for us. It is because of the level of our purchasing power," he added. Salehuddin suggested the government give emphasis on job-creating sectors, including the agriculture sector to enhance purchasing power.