Inflation slowed last month, but considerable threats remain to achieving the current fiscal year's target.
Inflation eased to 7.38 percent in January, from December's 7.69 percent, according to Bangladesh Bureau of Statistics (BBS).
The falling prices of food and non-food items have been credited for the drop.
In January, food inflation fell 0.12 percentage point month-on-month to 7.21 percent, while non-food inflation 0.64 percentage point to 7.79 percent.
“Inflation is moving in the right direction, which is why we were able to opt for a growth-supportive reduction in repo rates last week,” Hassan Zaman, chief economist of Bangladesh Bank, told The Daily Star.
The BB chief economist, however, believes several risks are at large, which would get in the way of achieving fiscal 2012-13's inflation target of 7.5 percent.
“Inflation risks remain due to high remittance inflows in the first half of fiscal 2012-13, global commodity price trends and the recent fuel price increases,” added Zaman.
The high remittance inflow is expected to put an upward pressure on asset prices and non-food inflation.
“The global food price remained at an elevated level. Wheat prices are expected to rise in the first half of 2013, which will have a knock-on impact on domestic price,” the BB said in its Monetary Policy Statement released last week.
The persistent turmoil in the Middle East means that oil price is likely to remain volatile, the statement said.
“Our recently announced monetary policy stance is calibrated keeping these in mind,” said Zaman.