Macroeconomic Forecast Bangladesh

Headline consumer price inflation (CPI) continued to ease in May, registering a 9.1% y-o-y level, down from 9.9% in the previous month. Food inflation, which stood at 7.5% y-o-y in May, is now well below the 14.4% peak hit in April 2011. Meanwhile, non-food inflation has only recently surpassed its peak rate (of 14.0% y-o-y in March), coming in at 12.7% last month. The current spate of disinflation still has further to go, given the ongoing slowdown of money supply growth. We expect the end-year inflation rate to fall to 7.0% next fiscal year (FY2012/13, July-June), with average inflation dropping from 10.8% to 5.8%.

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