1st Market update on inflation and other economic data sent to Rosemary Ocotober 2011.

1. BCLSA
Inflation and other economic data
October 2011

2. Point-to-point inflation in Aug highest in 42 months
 The country's point-to-point inflation reached 11.29 per cent in
August - the highest in the last three and a half years, as the
consumer prices index (CPI) for non-food items marked a big leap,
official data showed.
 The BBS (Bangladesh Bureau of Statistics) official said the CPI over
the last few months showed a steep rise, fuelling the country's
general CPI to a record high. The general CPI in August soared to
259.66 from 254.72 in July, the BBS data showed.
Source: http://www.thefinancialexpress-
bd.com/more.php?news_id=149771&date=2011-09-17
BCLSA Bangladesh

3. 2010-2011- Inflation Comparison
14
11.97
12
10.96 11.29
10.49 10.67
10.2 10.17
9.79
10
9.04 8.99 9.06 8.78 8.54 8.65 8.7
7.26 7.52 7.61
8
Year 2011
6
Year 2010
4
2
0
Jan Feb Mar Apr May Jun Jul Aug Sep
Source: http://www.bangladesh-bank.org/econdata/inflation.php
BCLSA Bangladesh

4. High inflation remains a concern
 Inflation continued to rise, with the year-on-year rate reaching
almost 12 percent in September. This is the highest recorded in last
twelve years. Increases in food prices (y-o-y) peaked at 14.4 percent in
April before declining to 13.8percent in September.
 The rise in nonfood inflation has been driven by rise in prices of
clothing and footwear, transport, furniture and household
equipments, and miscellaneous goods and services.
 Rising international commodity prices were the main source of food
price increases. Rising oil prices also result in rise in prices of almost all
other commodities in the consumer basket.
Source: World Bank – Bangladesh Economic Update September 2011
http://www.worldbank.org.bd/WBSITE/EXTERNAL/COUNTRIES/SOUTHASIAEXT/BANG
LADESHEXTN/0,,contentMDK:23027795~pagePK:141137~piPK:141127~theSitePK:295
760,00.html BCLSA Bangladesh

5. WB report: Inflation is high and volatile
Source: World Bank – Bangladesh Economic Update September 2011
http://www.worldbank.org.bd/WBSITE/EXTERNAL/COUNTRIES/SOUTHASIAEXT/BANG
LADESHEXTN/0,,contentMDK:23027795~pagePK:141137~piPK:141127~theSitePK:295
760,00.html
BCLSA Bangladesh

6. Depreciation of Taka
 Taka has been depreciating almost against all major currencies
during the last six months (November 2010 to April 2011). Exchange
rate of Taka per USD increased to BDT 72.85 at the end of the April
2011 from Tk.69.36 at the beginning of the FY 2011. Taka
depreciated around by 5 per cent in the first ten months of the FY
2011. Larger import payment, stagnating net FDI, lower flow of
foreign aid and decelerated remittance have contributed to the
depreciation of Taka. While good for exports, depreciation of taka
will make imports costly which is likely to be transmitted to domestic
prices and inflation.
Source: http://www.cpd.org.bd/downloads/IRBD_FY11.pdf
BCLSA Bangladesh

7. BDT/USD Exchange rate - 2011
77
75.9
76
74.9
75 74.65
74.1
74 73.45 73.35
72.7 72.85
73
72
71.15 71.3
71
70
69
68
Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11
Source: http://www.bangladesh-bank.org/econdata/inflation.php
BCLSA Bangladesh

8. Average Dollar rate against Taka at customer level
Source: http://www.thedailystar.net/newDesign/news-
details.php?nid=203349
BCLSA Bangladesh

9. IMF Press release on 15 September 2011
 Bangladesh‟s economy expanded at a strong pace in FY11 (July
2010–June 2011), supported by rapid export growth and
accommodative macroeconomic policies. However, inflation has
also been on the rise, pushed up by higher food prices and demand-
side pressures.
Source: http://www.imf.org/external/np/sec/pr/2011/pr11334.htm
---------------------------------------------------------------------------------------------
 Bangladesh is one of the top three rice importers.
Source:http://siteresources.worldbank.org/SOUTHASIAEXT/Resource
s/223546-1296680097256/SAEFNEW.pdf
BCLSA Bangladesh

10. Double digit inflation continues..
 Eminent Economist Dr. Akbar Ali Khan expressed his anxiety
regarding the current trend of inflation. He said, usually if the inflation
crosses 6%, the price of essential commodities goes up, but now the
inflation crossed double digit.
 According to a report published by New York based „Trading
Economics‟, the inflation in Bangladesh is the 4th highest in Asia and 3rd
in the South Asia after Afghanistan (17%) and Pakistan (11.99%).
Source: Amar Desh - http://www.amardeshonline.com/pages/details/2011/10/17/112291
BCLSA Bangladesh

11. Rising inflation poses tough challenge
 The food price component of both annual average and point-to-point
Consumer Price Index (CPI) inflation has been seeing a double-digit
rise since December 2010.
 According to data released by Bangladesh Bureau of Statistics
(BBS) on Sunday, the country is experiencing all-time high inflation
during the tenure of the present government, exceeding the highest
inflation rate earlier last month.
 The director-general of Bangladesh Institute of Development Studies
(BIDS), Dr MK Mujeri, said that the rising trend in inflation was likely
to continue, due to higher food prices, as crops were yet to be
harvested. “If this trend continues, macro economic conditions will
surely worsen,” he predicted.
Source: The Independent - http://theindependentbd.com/paper-edition/frontpage/129-
frontpage/75652-rising-inflation-poses-tough-challenge.html
BCLSA Bangladesh

12. CPD report on inflationary pressure on economy
 According to the Executive Opinion Survey carried out by the Centre
for Policy Dialogue (CPD) in collaboration with the World Economic
Forum (WEF): 83% respondents perceived that inflation will be a
major challenge for the economy in 2011 (77% in 2010).
Source: http://www.cpd.org.bd/downloads/GCR%202011.pdf
BCLSA Bangladesh

13. The Financial Express report
 The BBS official said the CPI over the last few months showed a
continuous rise. The general CPI in September rose to 264.85 from
259.66 in August this year.
 A weak taka has also added inflationary pressure on the country's
imports, experts said. Taka, according to official rates, has weakened
nearly 7.0 per cent this year.
 The government's borrowing from the central bank, they said, has
made the situation even worse.
Source: http://www.thefinancialexpress-bd.com/more.php?news_id=153156
BCLSA Bangladesh

14. Inflation projection by Unnayan Onneshan
Source: Bangladesh
Economic Update: Food
price and Inflation
Trajectory, Unnayan
Onneshan -
http://www.unnayan.org/

15. Inflation projection by Unnayan Onneshan
August
Source: Bangladesh
Economic Update: Food
price and Inflation
Trajectory, Unnayan
Onneshan -
http://www.unnayan.org/

16. Latest fuel price hike in September 2011
 The government on 18 September 2011 hiked fuel prices by a
maximum of 19.04 percent a litre
 In line with the new rates, prices of diesel, petrol, octane and
kerosene will jump by Tk 5 and furnace oil by Tk 8. Bangladesh
increased fuel prices for the second time in more than four months
in a move that economists fear will fuel inflation.
Source:http://www.thedailystar.net/newDesign/news-details.php?nid=203042
BCLSA Bangladesh

17. Latest fuel price hike in September 2011 continued…
 Inflation rose to 11.29 percent in August from 10.96 percent in July
due to an increase in non-food costs in the face of rising fuel
prices, transport fares, clothing prices and household expenses
 ''It is definitely going to have an impact on rising inflation,'' Bakht
said. He warned that the fuel price hike will increase production
costs in factories and transport fares, piling pressure on commodity
prices. - Zaid Bakht, research director of Bangladesh Institute of
Development Studies
Source:http://www.thedailystar.net/newDesign/news-details.php?nid=203042
BCLSA Bangladesh

18. Bus fares, CNG price hiked
 Less than 24 hours into the hike in fuel prices, the government increased bus and
auto-rickshaw fares, and the price of compressed natural gas on 19 September 2011
 This was the second transport fare hike in four months. On May 19, the government
hiked the transport fares by 30 percent.
 Khondaker Golam Moazzem, senior research fellow of the Centre for Policy
Dialogue, said the decision to hike prices of petroleum products and to increase bus fares
will have a bad impact on consumer spending
Source: http://www.thedailystar.net/newDesign/news-details.php?nid=203198
BCLSA Bangladesh

19. Inflation jumps to 12pc thanks to fuel price hike
 Prices of goods and services rose alarmingly in September as
increase in fuel prices pushed up inflation to 12 percent, the highest
rise since the Awami League-led alliance government assumed
office in January 2009.
 Conspicuously, the food inflation in urban areas in September stood
at 14.67 percent compared to 13.35 percent in rural areas in
September 2011.
Source: The Daily Sun - http://www.daily-sun.com/details_yes_17-10-2011_ds-inflation-
jumps-to-12pc-thanks-to-fuel-price-hike_367_1_1_1_5.html
BCLSA Bangladesh

20. Electricity price hike, again!
 A S M Alamgir Kabir, chairman of Power Development Board (PDB) said
that the price of electricity has to be increased to make the adjustment in
line with the increased price of fuel.
 Inflation will go up automatically as soon as the announcement will be
effective due to increase of production cost and price of different goods
including essential commodities. The cost of living will be increased
subsequently.
 It has been noticed that as soon as the fuel cost is increased the transport
fares are increased dramatically and usually the fares are increased more
than the reasonable rates.
Source:http://eprothomalo.com/index.php?opt=view&page=1&date=2011-09-23
BCLSA Bangladesh

21. FAO : Global Food Price Monitor – October 2011
 In Bangladesh, rice prices in September were unvaried for the
second consecutive month and were around their high levels of a
year ago despite large domestic supplies. By contrast, prices of
mainly imported wheat flour increased by around 9 percent in the
past month, reflecting higher fuel prices and increased transport
costs.
Source: http://www.fao.org/giews/english/gfpm/GFPM_10_2011.pdf
BCLSA Bangladesh