Macroeconomic Forecast Bangladesh

Headline consumer price inflation ticked up to 11.6% y-o-y in January, up from 10.6% in the previous month. Food inflation saw a marginal increase to 10.9% y-o-y (from 10.4%), while non-food inflation spiked to 13.2% (from 11.4%). The latest inflation figure poses upside risk on our end-FY2011/12 (July-June) consumer price inflation forecast of 9.6%. Despite the stubbornness of inflation, we continue to believe that disinflation is on the horizon as money supply growth continues to decelerate. Even though M3 money supply growth saw an uptick in December (to 16.9% y-o-y), we note that the overall downtrend, which started in early FY2010/11, remains firmly intact.

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