Decade's highest food inflation squeezes poor, low-income group
Overall inflation has remained above 9% since March
Food inflation in Bangladesh surged to 12.56% in October, marking a decade-high and intensifying the financial strain on the poor and low-income population.
With the majority of their limited income dedicated to food expenses, this group faces diminished financial capacity to address critical needs such as healthcare, education, and housing.
Food inflation was 12.54% in August and 12.37% in September, according to the Bangladesh Bureau of Statistics (BBS).
In October, non-food inflation saw a substantial increase, rising to 8.30% from 7.82% in September.
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Overall inflation also increased in October, reaching 9.93%, up from 9.63% in September, with the highest rate in a decade being 9.94% in May.
Inflation has consistently remained above 9% since March, and while it has shown a recent decline, it has not fallen below 9.5% since May.
Zahid Hussain, former lead economist at the World Bank's Dhaka office, considers the government's recent efforts to combat inflation inadequate.
Measures like halting money printing and raising interest rates to offset monetary financing shortfalls, in his view, were implemented too late to have a significant impact on reducing inflation.
He also mentioned that imports have been constrained due to the foreign exchange crisis, causing disruptions in the supply system, which remains unsolved and has worsened.
Regarding food inflation, he pointed out that, apart from rice, there is a reliance on imports for various other products, and there are issues within the market system.
Prices of items such as eggs, potatoes, and edible oil are increasing without economic justification, making it challenging to attribute the price hikes to supply or demand dynamics, he said.
"Market dominants often periodically raise prices, and when they do, it takes time for prices to decrease. This market manipulation contributes to food inflation volatility," Zahid Hussain observed.
He further emphasised that the government's market management exacerbates the issue as prices are fixed at the retail level, while product price manipulation occurs at the wholesale, import, or production levels.
According to the economist, effectively reducing inflation requires more than just price fixing; it necessitates ensuring competition at those various stages.
Double digit rural inflation
In rural areas, inflation exceeded urban areas, rising to 9.99% last month from 9.75% in September, as per BBS data.
Food inflation in rural areas increased marginally to 12.53% in October from 12.51%, while non-food inflation saw a significant jump to 8.01% from 7.42% in the previous month.
In urban areas, inflation rose to 9.72% in October from 9.24% in September. Food price inflation in urban areas stood at 12.58% in October, compared to 12.01% in the previous month, and non-food inflation increased to 8.50% from 8.12%.
According to BBS data, the wage rate rose to 7.69% in October, up slightly from 7.64% in the previous month.
