Inflation rose to 7.04% in July, fuelled by soaring non-food prices, after a slight fall in the previous month.
It had eased slightly to 6.97% in June, the final month of the immediate past fiscal year, according to the Bangladesh Bureau of Statistics (BBS).
Wage rate also witnessed marginal rise of 0.73% to 8,563.49 points from 8,501.22 points during the period with highest wage increase in Agriculture sector, followed by manufacturing, construction and fishery, the data showed.
“Consumption increased in July due to the Eid festival and Ramadan, pushing up the inflation,” said Planning Minister AHM Mustafa Kamal as he released the data at his office in Dhaka yesterday.
He said it is quite natural for rising inflation in the last month when people were in festive mood.
Food inflation has been recorded at 7.94% in July, a 0.06 percentage points down from that of 8% in the previous month, BBS data showed.
During the period, non-food inflation rose to 5.71% from that of 5.45%.
The planning ministry statement said price of vegetables, fish, flattened rice, meat, spices, milk and other essentials increased.
Increase in prices was also seen in non-food items like clothing, house rent, utensils, health service, transport, education materials and other services in the last month, making impact on the inflation, it said.
During the period, the rural area hit hard as overall inflation stood at 6.93%, which was 6.73%. But inflationary pressure eased slightly in the urban areas, as it was 7.24% in July from June’s 7.42%.
Bangladesh Bank, in its policy statement (July-December) released last month, said the FY15 inflation target announced in the budget is 6%.
Reducing average inflation from its current 7.4% level may prove to be challenging especially as aggregate demand is likely to pick up in first half of this fiscal and in general twelve-month average inflation, by definition, only changes in an incremental manner, it said.
It said the central bank will continue to focus on achieving its inflation targets while providing sufficient space in its monetary program for lending to activities which support broad-based investment and inclusive growth objectives.
The persisting inflationary pressures over the past few months with the risks ahead related to the inflation outlook imply that achieving the FY15 inflation target of 6.5% will be challenging, it said.
As such BB has decided to keep policy rates unchanged. The Cash Reserve Requirement (CRR) was raised in June 2014 by 50 basis points to absorb part of the excess liquidity and help contain inflation – this remains unchanged.
In June, there was a slight uptick in non-food inflation as it rose to 5.45%, perhaps due to increased consumer demand as Eid-ul-Fitr approaches, the monetary policy said.