The New Nation - Internet Edition

UNB, Dhaka

Consumers will have to wait apparently until the next aman harvest to witness if there is any declining trend in the price of rice as projected by Bangladesh Bank chief economist Dr MK Mujeri.

"The price of rice is likely to come down if there is a good harvest of next aman," he said yesterday, releasing Bangladesh Bank Quarterly for April-June period of 2008.

Dr Mujeri said the price of rice did not come down as such as expected after the bumper boro harvest due to stocks by large farmers and traders on expectation of higher price.

"If there is a good aman production, the hoarding capacity would be reduced and the price may come down," he said, adding that the price would also depend on how the traders are going to behave responding to a declining inflation expectation.

From the quarterly report, Dr Mujeri said the inflation witnessed a bit declining trend since March, but it was not too strong. However, there was a good indication that the non-food inflation declined in the rural areas as compared to the urban areas.

About possible price situation during the month of Ramzan, he said the Ministry of Commerce must considering measures for the occasional rise of prices.

Asked whether the edible oil traders should have declared that the price of edible oil would reduce in keeping with the declining international price, the BB chief economist chose not to say anything.

Instead of an announcement for bringing down the prices in consistence with the international price, Commerce Adviser Dr Hossain Zillur Rahman Wednesday said that the edible oil price would not increase during the month of Ramzan.

It has become well established that the importers and traders increase the prices of commodities within minutes it goes up in the international market. But, when the prices decline in the international market, it is hardly adjusted.

In a short-term outlook, the BB quarterly said that in the present situation, softening of the inflationary pressure would require higher growth and increased production of essential food and other items in the face of tight and unstable world market.

It stressed on striking a balance between growth and price stability to counter any threat to macroeconomic stability and poverty reduction goals.

"Although monetary tightening can bring down inflation, it has unacceptably high cost in terms of foregone output and employment," it added.

The quarterly expected that the targeted GDP growth of 6.5 percent for the current fiscal would be achieved as indications suggest, but it would face several downside risks making economic management challenging in the near term.

It urged monitoring the challenges and implementing timely policy response to face the challenges like the need for increasing productivity that has been suffering from continuing power shortages, other infrastructure bottlenecks and socio-political events.

Asked about the possible impact of deportation of workforce from abroad, Dr Mujeri informed that the central bank has already expressed its concern and requested the Ministries of Foreign Affairs and the Expatriate Welfare & Overseas Employment to take necessary measures in this regard.

"I hope things would change soon," he said.