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1. bclsa market data on inflation -october 2011


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

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1. bclsa market data on inflation -october 2011

  1. 1. BCLSAInflation and other economic dataOctober 2011
  2. 2. Point-to-point inflation in Aug highest in 42 months The countrys 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 countrys 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- BCLSA Bangladesh
  3. 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 SepSource: BCLSA Bangladesh
  4. 4. High inflation remains a concern Inflation continued to rise, with the year-on-year rate reachingalmost 12 percent in September. This is the highest recorded in lasttwelve years. Increases in food prices (y-o-y) peaked at 14.4 percent inApril before declining to 13.8percent in September. The rise in nonfood inflation has been driven by rise in prices ofclothing and footwear, transport, furniture and householdequipments, and miscellaneous goods and services. Rising international commodity prices were the main source of foodprice increases. Rising oil prices also result in rise in prices of almost allother commodities in the consumer basket.Source: World Bank – Bangladesh Economic Update September 2011,,contentMDK:23027795~pagePK:141137~piPK:141127~theSitePK:295760,00.html BCLSA Bangladesh
  5. 5. WB report: Inflation is high and volatileSource: World Bank – Bangladesh Economic Update September 2011,,contentMDK:23027795~pagePK:141137~piPK:141127~theSitePK:295760,00.html BCLSA Bangladesh
  6. 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: BCLSA Bangladesh
  7. 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-11Source: BCLSA Bangladesh
  8. 8. Average Dollar rate against Taka at customer levelSource: BCLSA Bangladesh
  9. 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: Bangladesh is one of the top three rice importers.Source: s/223546-1296680097256/SAEFNEW.pdf BCLSA Bangladesh
  10. 10. Double digit inflation continues.. Eminent Economist Dr. Akbar Ali Khan expressed his anxietyregarding the current trend of inflation. He said, usually if the inflationcrosses 6%, the price of essential commodities goes up, but now theinflation crossed double digit. According to a report published by New York based „TradingEconomics‟, the inflation in Bangladesh is the 4th highest in Asia and 3rdin the South Asia after Afghanistan (17%) and Pakistan (11.99%).Source: Amar Desh - BCLSA Bangladesh
  11. 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 - BCLSA Bangladesh
  12. 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: BCLSA Bangladesh
  13. 13. The Financial Express report The BBS official said the CPI over the last few months showed acontinuous rise. The general CPI in September rose to 264.85 from259.66 in August this year. A weak taka has also added inflationary pressure on the countrysimports, experts said. Taka, according to official rates, has weakenednearly 7.0 per cent this year. The governments borrowing from the central bank, they said, hasmade the situation even worse.Source: BCLSA Bangladesh
  14. 14. Inflation projection by Unnayan Onneshan Source: Bangladesh Economic Update: Food price and Inflation Trajectory, Unnayan Onneshan -
  15. 15. Inflation projection by Unnayan Onneshan August Source: Bangladesh Economic Update: Food price and Inflation Trajectory, Unnayan Onneshan -
  16. 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: BCLSA Bangladesh
  17. 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 StudiesSource: BCLSA Bangladesh
  18. 18. Bus fares, CNG price hiked Less than 24 hours into the hike in fuel prices, the government increased bus andauto-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 governmenthiked the transport fares by 30 percent. Khondaker Golam Moazzem, senior research fellow of the Centre for PolicyDialogue, said the decision to hike prices of petroleum products and to increase bus fareswill have a bad impact on consumer spendingSource: BCLSA Bangladesh
  19. 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 - BCLSA Bangladesh
  20. 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: BCLSA Bangladesh
  21. 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: BCLSA Bangladesh