Food inflation is likely to come down to below 10 per cent during the first quarter of the current fiscal year, a top Bangladesh Bank (BB) official said on Thursday. Referring to the BB statistics, the official said that on a point-to-point basis, inflation declined to 10.20 per cent in May from 10.67 per cent in April, and 10.49 per cent in March 2011 as a result of a slight drop in the prices of rice and vegetables. The downtrend in food inflation is likely to continue in June too, he said.
The BB official further noted that the recent conference of the central banks, which was organised by the Bank for International Settlements (BIS) in Switzerland, called upon the US and UK central banks to adopt tight monetary policies to help contain the high global inflation.
BB governor Dr Atiur Rahman attended the two-day conference beginning June 28.
The BB official said aid the central banks of China and India had been executing a tight monetary policy since last fiscal year as a precautionary measure to check inflation.
“Execution of the BIS call by the US and UK central bank, would help contain inflation globally and Bangladesh, too, would benefit from it,” said the official.
The prices of rice have gone down in the international market for the last couple of months following improved supply, the Centre for Policy Dialogue (CPD) executive director, Prof (Dr) Mostafizur Rahman, told The Independent.
“Yes, present international market indicators clearly signal that point-to-point inflation is set for a slight decline globally in the coming months. However, it would vary on movement of fuel prices,” he said.
The budgetary allocation for agriculture would increase productivity, which may ease inflationary pressure to some extent unless there is a natural disaster affecting production of crops, he added.
Rahman warned that all efforts and estimates might go awry if there is no coordination between monetary and fiscal policies like in last fiscal year. “It is very important to maintain good coordination between fiscal and monetary policies to achieve the target of bringing down inflation,” he pointed out.
The CPD executive director said growth in credit and broad money had overshot targets. This resulted in the highest-ever 28 per cent credit growth in the private sector and fuelled inflation.
Rahman welcomed the BB target to bring down credit and broad money growth to 18 and 15 per cent, respectively, this fiscal year.

News: The Independent/ Bangladesh/ July-02-2011