Production of aus and aman fell below last year’s level and reduced rice yield suggested that the agriculture growth would fall, the central bank said, justifying its downward revision of growth forecast in its quarterly report.

   However, robust credit disbursement and surging remittance inflow showed signs that the economy was performing well, said a central bank official.

   He said service and manufacturing sectors maintained their growth momentum, which might offset fall in the agricultural production.

   ‘Aus and aman production fell, but boro and wheat production is quite satisfactory.’

   He said inflation is unlikely to reach double-digit, but it may create a big problem if the government fails to respond immediately and effectively to address supply-side constraints.

   Inflation touched 7.28 per cent in February.

   ‘The central bank is doing everything to control demand-side inflationary pressure, but we are helpless against the supply-side pressures,’ he said.

   The central bank can use two instruments – interest rate hike and lower money supply – to curb inflation.

   Other government agencies and authorities should ease supply-side pressures, he said, referring to factors like anti-hoarding drive, eviction of hawkers and fuel price hike that influence the supplies and prices.

   Former deputy governor of the central bank Khondkar Ibrahim Khaled said if the food price is not controlled, the inflation may reach double-digit level.

   Rice accounts for about 20 per cent of the consumer price index basket and a small price variation is enough to change the whole scenario, he said.

   To stabilise rice price in domestic market, he suggested that the government should import coarse rice from Myanmar or Indonesia or any other country where rice is cheaper.

   Khaled, who was managing director of Pubali Bank, however, said inflation may creep up to 9 per cent level even if food prices remain in check.

   The recent energy price hike may contribute 0.75 percentage point to overall inflation, said an official of the central bank.

   He said in the open market economy, farmers do not have the capacity to increase prices.

   ‘If price of any commodity is high in the international market, there is no reason local producers will reduce price,’ he argued.

   In India, prices of rice were fuel-adjusted so rice is also not cheap there, the central banker said.

 

@ The Bangladesh Journal

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