Bangladesh March inflation dips, but above target

DHAKA, May 11 (Reuters) - Bangladesh's annual consumer price inflation slowed to 10.06 percent in March from 10.16 percent a month earlier, official data showed, but it remained above target because of soaring food prices.

A senior official at the Bangladesh Bureau of Statistics said on Sunday that inflation was driven by a 12.92 percent spike in food prices, while prices of non-food items rose 5.63 percent from a year earlier.

The central bank has projected inflation would rise to 8.5 percent against a target for average annual inflation of 6.5-7.0 percent for the current fiscal year to June 2008.

Economists blamed the rise in inflation on higher global food prices, natural disasters that ravaged the poor south Asian nation of 140 million last year, and inefficient markets.

Two spells of devastating floods in July-September last year followed by the country's worst cyclone since 1991 in November destroyed nearly 2 million tonnes of rice, the country's main staple food.

Price hikes for several commodities in the world market, especially rice, wheat, crude and edible oils, and other essential products has created inflationary pressure in the Bangladesh economy, the central bank said in its latest report.

"In this backdrop, the government has taken policies to gear up domestic economic activities, especially in agriculture, small and medium Enterprises, and other rural activities and improve the domestic supply chains," it added.

($1=68.58 taka)

(Reporting by Ruma Paul)