Editorial
Inflation rate on the rise
Holding the line imperative
The latest figures of Bangladesh Bureau of Statistics (BBS) show that the rate of inflation for both food and nonfood items has registered a marked rise, although it is still safely below double digit. What is important to bear in mind is that inflation which had fallen to 2.25 percent in June has been slowly but steadily increasing since July. And in October it stood at 6.71 percent on point-to-point basis, principally because of the rising food price.
Actually, a few domestic and international factors have combined to bring about the inflationary pressure on the national economy. International food markets showed signs of strains owing to drought in India and successive cyclones in Philippines and some other Southeast Asian countries causing lower food production, higher food prices and increased demand for import in the overall. As it is, international commodity prices have been on the rise due to higher energy and transshipment costs. On our domestic front, drought and delayed rains have adversely affected aus crop and the prospects for aman crop respectively. Simultaneously, the government-announced new pay-scales for the public servants could produce 'inflationary pressure', even though it will be implemented in phases.
How do we keep the inflation from rising further? Let's not forget that with every bit of increase in the inflation rate, it is the poor, the numerically larger segment of the population, that is the hardest hit. Besides, if the rate of inflation crosses double digit it could render macroeconomic management somewhat difficult. In this context, that which lies well within our capacity to deliver should be our first priority: we can ensure steady supply of inputs to harvest a sizeable boro crop. Alongside, we keep a constant tab on the international food market to be able to negotiate better price for import, if and when we resort to it, by way of building stocks through advance planning.
The other factors that might induce a higher inflation to which the ADB quarterly has drawn our attention are excess liquidity in banks and depreciation in the value of Taka. Productive investment in rural sector through dynamic farm and SME credit operations of the banks, greater austerity in government revenue expenditure and quality public spendings on ADP can together help us keep inflation in check.
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