Food inflation has touched double digits for the second consecutive month this year, indicating that people need to expend a good chuck from their income to purchase food items and that amount is increasing gradually.
From 10.22 per cent in April, food inflation surged by 54 basis points to 10.76 per cent in May. The inflation rate was 8.84 per cent in April and May last year, according to the latest data from the Consumer Price Index (CPI) released by the Bangladesh Bureau of Statistics (BBS) on Monday.
The last time the nation saw food inflation in double digits was in November last year — 10.76 per cent. From December, the rate dropped back again to single digit.
The non-food inflation, however, dropped by 15 basis points to 9.19 per cent in May from 9.34 per cent in April, meaning non-food item expenditure has decreased a bit.
Meanwhile, Bangladesh’s overall inflation rose to 9.89 per cent in May from 9.74 per cent in April, mostly due to price hikes in food items, which is the highest in the past seven months. It was 9.93 per cent in October last year.
BBS data showed that the moving average of inflation in the last year — from June 2023 to May 2024 — was 9.73 per cent, which is higher than the previous year — from June 2022 to May 2023 — when it was 8.84 per cent.
However, for the current fiscal year, the government had aimed to keep the inflation rate at 6.5 per cent but it could not be attained and the target was later revised to 7.5 per cent.
Talking to The Business Post on this issue, Dr Sayema Haque Bidisha, professor of economics at Dhaka University, said that the rise in food inflation is a part of the overall inflation’s upsurge tendency. “This trend will not change overnight. As the overall inflation is increasing and sometimes dropping a bit, food price is also following the trend.”
She said that there is an unexplained part of the inflation situation going on in the country’s economy. “The government should have taken measures to control that in the beginning. They have indeed taken some measures but it’s already late.”
She thinks that day-to-day life may get costlier after the upcoming FY2024-25 budget. “Let’s see what the government plans next to tame inflation. It depends on long-term initiatives. The short-term ones have already failed.”
Meanwhile, according to the BSS data, overall inflation was higher in villages than in urban areas. In rural areas, inflation increased from 9.92 per cent in April to 9.99 per cent in May. For urban areas, it increased from 9.46 per cent in April to 9.72 per cent in May.
For food inflation in both rural and urban areas, people spent more in May than in April. It was 10.25 per cent in April and 10.73 per cent in May rural areas while 10.19 per cent in April and 10.86 per cent in May in urban areas.
Rural people spent less on non-food items in May as non-food inflation dropped to 9.31 per cent in May from 9.60 per cent in April. However, in urban areas, non-food inflation was nearly unchanged — 9.01 per cent in April and 9.03 per cent in May.
Meanwhile, BBS on Monday also published the Wage Rate Index (WRI), which is an important indicator for measuring the trend and changes in the aggregate wages of the wage earners of a country.
The wage rate index measures the movement of nominal wages of low-paid skilled and unskilled labour over time in different sectors of the economy.
The WRI showed that wage rate growth is not proportionately compatible with the growing inflation — both for food and non-food items. While the wage rate inflation was 7.88 per cent in May, increasing by only three basis points from 7.85 per cent in April, the food inflation increased by 54 basis points and general inflation jumped 15 basis points in May.
