Bangladesh inflation quickens on food price surges

DHAKA: Rising food prices pushed Bangladesh's annual inflation rate up to 9 percent in January from 8.3 percent a month earlier, official data showed on Sunday.

Food inflation in January was 11.9 percent, the highest since Sept. 2008 when food inflation hit 12.1 percent, the Bureau of Statistics said. Non-food inflation rose 3.9 percent in January from 3.3 percent in December.

In January, the central bank raised its inflation forecast for the 2010/11 fiscal year ending June to 7 percent from 6.5 percent, largely because of higher food prices. Inflation in the 2009/10 fiscal year was 7.3 percent, above the target of 6.5 percent.

Inflation has accelerated mainly due to a surge in the price of rice, the staple food for the population of more than 150 million, a senior bureau official said. Higher prices of wheat, edible oil, meat, spices and fruits also contributed, the official added.

Bangladesh, like other Asian and African nations, has moved to build stocks of staples such as rice and wheat in order to combat surging food costs and avoid future supply shocks.

The government is importing 2.2-3.0 million tonnes of food grain, including 1.2 million tonnes of rice, this fiscal year, up from nearly 550,000 tonnes in the previous year to secure supplies amid soaring prices on global markets.

Analysts expected food costs to rise further in coming months in step with rising global commodity prices.

Global food prices hit a record high in February, the United Nations said on Thursday, warning that fresh oil price spikes and stockpiling by importers keen to head off popular unrest would hit already volatile cereal markets.

With public discontent growing over high prices, the government has increased its discount grain distribution target to 3 million tonnes for the year to June from 2.7 million, adding pressure to the budget.