The analysis on the January-July monetary policy statement said the low inflation indicates a situation of the “extremely squeezed demand.”
In the MPS the possible projection of the inflation rate is 5.25%, but real inflation rate can be as low as 4.75% and as high as 6%.
AB Miza Azizul Islam, former caretaker government finance adviser, however said the inflation rate of 4.75% would not create disinflation situation.
He said an inflation rate of below 2% could result in disinflation.
But the low inflation rate may lead to fall in industrial production.
The inflation rate came down to 5.03% in December last year, the lowest in 53 months, assisted by a steady decline in non-food prices since June as well as no supply disruption since political situation remained calm.
According to official statistics, the general inflation rate went down 35 basis points in December from 5.38% in November.
This was led by the fall in non-food inflation, which dropped to 4.49% in December, a decline of 88 basis points from 5.33% a month earlier.
Food inflation fell slightly to 5.38% from 5.41% in November.