March 14, 2017 / 11:32 AM / 5 months ago

UPDATE 1-Bangladesh Feb inflation quickens for second month as food prices surge

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DHAKA, March 14 (Reuters) - Annual inflation in Bangladesh accelerated in February for the second straight month, the planning minister said on Tuesday, driven by a jump in food prices.

Consumer prices in February rose 5.31 percent from a year earlier, accelerating from 5.15 percent the previous month, the minister, Mustafa Kamal, told a news conference.

Annual food inflation in February quickened to 6.84 percent from 6.53 percent the previous month, while non-food inflation dropped to 3.07 percent from 3.10 percent.

A spike in the prices of beef and edible oil drove the surge in food inflation, the minister said.

The drop in prices of non-food items, however, could be short-lived, as the government raised heavily-subsidised gas prices from this month, prompting protests.

The government also plans to raise electricity tariffs in a bid to cut subsidies, which is likely to fuel public anger over the cost of living in the impoverished country of 160 million.

Average inflation was 5.92 percent in the previous financial year that ended in June 2016, the lowest in 12 years, largely due to a sharp drop in global commodity prices and good farm output.

The government aims to hold inflation at 5.80 percent this financial year.

Early this year, the central bank kept its key policy interest rates unchanged, citing overall macroeconomic stability and a steady inflation outlook.

In January 2016, the central bank cut its key interest rate by half a percentage point, for the first time in nearly three years, as easing inflation gave it room to help spur economic growth. (Reporting by Ruma Paul; Editing by Clarence Fernandez)

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