Inflation drops to 8pc in July
BBS launches new base year for calculation, shows inflation at 5.21pcStaff Correspondent
The overall point-to-point inflation declined further to 8.03 per cent in the first month of the new fiscal year in July from 8.56 per cent in June because of a drop in prices of rice and other food items, Bangladesh Bureau of Statistics said on Sunday.
The BBS data showed that food inflation decreased to 6.30 per cent in July from 7.08 per cent in June and the non-food inflation also came down to 11.54 per cent from 11.72 per cent as per the inflation calculation based on the base-year of 1995-1996.
The BBS also introduced calculation method of inflation based on the new base year of 2005-2006 on the day.
As per the new base-year, inflation declined to 5.21 per cent in July from 5.54 per cent in June.
‘The inflation rate decreased because of decline in prices of rice and other food items,’ BBS director general Golam Mostafa Kamal told reporters at a press briefing at its conference room.
The inflation calculation based on the new base year declines mostly due to change in the consumer price index basket and weight of the items, he said.
Usually, the overall inflation declines sharply if the food prices decrease slightly as the CPI basket is dominated by food items, he added.
In the new base year to measure inflation, some 136 new items have been included in the rural CPI basket and 151 items in the urban basket while some 33 and 31 items have been excluded from the rural and urban baskets respectively, Mostafa Kamal said.
From now on, BBS will collect price data of 318 items for the rural index basket and 422 items for the urban index basket, he said. The figures were earlier 302 and 215 respectively.
The BBS modified the base year as people’s consumption and expenditure habit changed over the years.
Officials said that BBS included fast food, mobile phones, internet, mineral water, furniture, packaged biscuit, noodles, potato chips, juice, and various kinds of rice. Vegetables and fishes remained in the new list.
However, on a monthly basis, food inflation increased by 1.76 per cent in July compared to the previous month mostly because of price hike of lentils, vegetables, edible oil, and tobacco related items and non-food inflation also rose by .89 percentage point mainly due to price hike of clothes, house rent, furniture and household items and medical expenditure.
According to the BBS data, in urban areas, the general point-to-point inflation rate was 8.85 per cent in July compared to 7.71 per cent in rural areas. The general inflation in urban areas in June was 10.29 per cent compared to 7.88 per cent in rural areas.
The food inflation decreased in rural areas to 5.84 per cent in July from 6.02 per cent per cent the month before while non-food inflation in rural areas also decreased to 11.76 per cent compared to 11.88 per cent in June.
In urban areas, food inflation in July also decreased sharply to 7.36 per cent, lower from 9.57 per cent in June while non-food inflation in the same month also fell to 10.97 per cent from 11.28 per cent in previous month.
However, the average inflation rate in the last 12 months (August 2011–July 2012) was 10.36 per cent, much higher than the government’s target to keep it at 7.50 per cent in the current fiscal year. The average inflation was 9.11 per cent in the same time of the previous fiscal year.
According to the calculation based on the new base year, food inflation decreased to 2.23 per cent in July from 2.56 per cent in June while non-food inflation come down to 9.94 per cent in the month from 10.20 per cent in the month before, Mostafa Kamal said.
Bangladesh Institute of Development Studies research director Zaid Bakht said that as per new base year, the inflation rate was supposed to decrease but the rate of 5.21 per cent that BBS showed was unexpected.
‘The inflation rate is not supposed to decrease at a high rate which BBS showed as non-food inflation rate remained high and the weight of non-food items increases if base year is changed,’ he said.
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