Despite tight monetary policy, the annual rate of inflation (12-month annual average CPI) increased to 8.12 percent at the end of September, according to Bangladesh Bank (BB) monthly economic update for November. The average inflation was 5.15 percent at the end of September last year, the report said.

According to the update, the rate of inflation on point-to- point basis also increased to 7.61 percent in September 2010 from 4.60 percent at the end of September 2009.

To combat the inflation, the central bank earlier taken some measures including raising the cash reserve ratio (CRR) to decrease money supply from banks.

The economic update, however, shows the domestic credit, particularly credit to private sector had been on rise in the past few months even after tightening of cash flow from banking sector. According to the report, the credit to private sector rose by around 26 percent in August. At the same time, export earnings and remittance also rose significantly, increasing the cash flow and eventually the inflation rate.

The report recorded 10.28 percent or US $86.14 million rise in remittance inflow in October over September's inflow of US $831.71 million. Export receipts in September amounted to US$ 1415.1 million, which is higher by US$ 354.9 million or 33.47 percent compared to export receipts in September 2009.

Sourche: The Bangladesh Today, Bangladesh/10th Dec 2010