Inflation rate on food items has increased in August due mainly to high prices in the international market and low domestic production but at the same time decreased on non-food items. The overall inflation rate on point-to-point basis reached 10.12 percent in August, which was 0.02 percent higher than that of July, according to the Bangladesh Bureau of Statistics (BBS) data.

Inflation rate on food items reached 11.62 percent in August measured on a point-to-point basis, the BBS figures show. It was 0.20 higher than the figure of July, which stood at 11.42 percent.
However, inflation rate on non-food items has decreased by 0.24 percent in August and the figure was 7.99 percent.

The inflationary data from April to July shows an increasing trend of inflation rate on non-food items. But the latest figure shows continuous spiralling prices of food items in recent times.

According to the BBS data, there was a higher inflation rate in urban areas in August, while the rate in rural areas has slightly decreased.

In rural areas, the overall inflation rate has decreased by 0.03 percent and reached 10.07 percent. On the other hand, the rate in urban areas has increased by 0.15 percent and reached 10.24 percent.

Inflation rate on food items in urban areas has increased by 0.48 percentage point and reached 12.94 percent. On the other hand, it has increased by 0.09 percentage point in rural areas and the figure was 11.6 percent.

In case of non-food items, inflation rate has decreased in both rural and urban areas in August and it decreased more in rural areas.

“The decrease of inflation rate on non-food items in rural areas has affected overall inflation rate in rural areas,” an official of the Bangladesh Bank (BB) said.

According to a BB quarterly report released last week, higher transport costs as well as additional demand side pressures and market syndication are main reasons for price disparity of food items between urban and rural areas in recent time.

The BB report says in the international market there has been a rapid rise in the prices of commodities and between December’06 and June’07, the global commodity price index increased by 11.14 percent.

During the period, price of soybean oil increased by 24.5 percent in international market, wheat 9.17 percent, palm oil 41.68 percent and rice 5.5 percent, the report adds.

The BB report says net food production in the last fiscal year was 248.75 lakh tonnes against the requirement of 251.68 lakh tonnes. For the first time in recent years, food production was less than requirement, as per the data.

Besides, food import was also less in the last FY as the country imported 24.23 lakh tonnes of food. During the FY 2005-06 import of food items was 25.63 lakh tonnes.

The recent flood also affected production of aus and aman paddy, resulting in a rising trend of rice prices in the local market. “Chances are very slim of a lower rice price in recent time,” said a BB official.

According to the latest Trading Corporation of Bangladesh (TCB) report, prices of per kilogram of coarse rice increased by 27.78 percent, while in case of wheat the increase was 60.98 percent in the last one year.