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UPDATE 1-Bangladesh inflation picks up, to climb on fuel price hike

Source : REUTERS
Last Updated: Tue, Jan 08, 2013 14:10 hrs

(Adds details)

DHAKA, Jan 8 (Reuters) - Bangladesh's annual inflation rate in December accelerated for the second month in a row and price pressures could intensify further after authorities raised fuel prices last week.

Fuel prices were increased by up to 11.5 percent from Thursday midnight in the latest move to trim the government's subsidy burden, sparking widespread criticism and a nationwide strike enforced by the main opposition alliance on Sunday.

Annual inflation in December was 7.69 percent, based on the old series using 1995-96 as a base year, the statistics office said on Tuesday, compared with 7.41 percent in November, which snapped a declining trend since February 2012.

Food prices in December were 7.33 percent higher than a year earlier, an increase from November's on-year pace of 6.45 percent. In contrast, the non-food inflation pace fell to 8.43 in December from 9.31 percent the previous month.

A spike in prices of rice, pulses, fish, meat and spices pushed food inflation higher, a senior official at the Bureau of Statistics said.

However, prices of both food and non-food items would likely go up sharply due to the fuel price hike, the official said.

December's reading, based on the new series using 2005-06 as a base year, was 7.14 percent, up from November's 6.55 percent.

In another unpopular move the government plans to raise electricity tariffs, which could add to public fury over the spiralling cost of living.

Prices pressures are a major concern for the government, which faces an election in late 2013.

The central bank has kept its key policy rate unchanged since last January, when it was raised for the fifth time since 2011.

Annual inflation in the financial year that ended in June 2012 accelerated to 10.62 percent from 8.80 percent the previous year. Non-food prices were the major contributor as the government, saddled with a huge subsidy bill for oil, raised fuel and power charges several times.

Bangladesh aims to trim inflation to 7.5 percent in the current fiscal year. (Reporting by Ruma Paul; Editing by Anis Ahmed, Ron Askew)



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