Bangladesh's rural areas are experiencing greater pressure from the rising cost of living compared to urban areas. According to data from the Bangladesh Bureau of Statistics (BBS), inflation in rural areas surpassed that of urban areas over the last five months (April to August) this year.
An analysis of BBS inflation data from January to August reveals that, in certain months, food inflation in rural areas exceeded that in urban areas. This is despite the fact that rice, vegetables, fruits and other essential commodities are produced in rural regions.
Data shows that, during April and August this year, food inflation in rural areas stood at 10.25 per cent and 11.44 per cent, respectively, compared to 10.19 per cent and 11.24 per cent in urban areas during the same period.
In some months, non-food inflation rates were also higher in rural areas than in urban areas, even though villages typically do not incur costs for housing rent, transportation, or utility bills, unlike cities.
Non-food inflation
From April to August, for five consecutive months, non-food inflation was higher in rural areas compared to urban areas. In rural regions, non-food inflation stood at 9.6 per cent in April, 9.31 per cent in May, 9.26 per cent in June, 9.84 per cent in July and 10.45 per cent in August. The August figure represents a significant rise in recent years.
By comparison, urban areas saw non-food inflation rates of 9.01 per cent, 9.03 per cent, 8.98 per cent, 9.43 per cent and 9.20 per cent for the same months, respectively.
Analysts suggest that this elevated non-food inflation from April to August contributed to higher general inflation in rural areas compared to urban ones during this period.
The rise in non-food inflation in rural regions is partly attributed to supply chain disruptions caused by student movements in July and August, which hampered the availability of goods in the market to meet consumer demand.
This situation affected the entire country, with general inflation soaring to 11.66 per cent in July, marking the highest rate in the past decade, before easing slightly to 10.49 per cent in August, following the downfall of the Hasina regime amid violent protests.
Moreover, the rising consumption of non-food items in rural areas is linked to an improving standard of living.
Expert insights
Experts have weighed in on the rising inflation in rural areas, specifically discussing the inflation gap between rural and urban regions.
Mahfuz Kabir, research director at the Bangladesh Institute of International and Strategic Studies (BIISS) told The Business Post that the majority of the population lives in rural areas, where inflation has been rising more sharply compared to cities. This, he said, is putting most of the rural population under considerable pressure.
“The government runs social protection programmes in rural areas. If inflation continues to rise in these areas, changes in programme policies will be necessary,” he said.
Kabir also discussed the reasons behind the higher inflation in rural areas compared to urban regions. He noted that changes in rural trade patterns are a key factor. “There have been some changes in rural trade patterns. Previously, more trade occurred between rural regions," Kabir explained.
"Now, with improved roads, goods are being sent to nearby business hubs from rural areas and then returning to the villages. This is being done for higher profits, which in turn affects the prices of goods,” he added.
Kabir further highlighted the issue of reverse migration, suggesting it as another contributing factor. He said that rising inequality in cities has led to an increased cost of living, driving many people to return to rural areas.
“However, these individuals are maintaining an urban lifestyle, creating new types of demand in rural areas,” he said.
“If rural inflation continues to exceed that of urban areas for a few more months, it will be clear that reverse migration is indeed happening,” he added.
Echoing his views, Monzur Hossain, senior research fellow at the Bangladesh Institute of Development Studies (BIDS), said that inflation in rural areas has been higher than in cities for quite some time, nothing that this appears to be a new trend.
"One possible reason could be that goods are now moving more frequently from rural areas to cities. Additionally, transportation costs are higher in rural regions," Monzur Hossain said.
"However, no concrete cause has yet been identified regarding this issue," he remarked.
Other sectors
The impact of this inflation is being felt across multiple sectors in rural areas, with health, transportation, housing, water, electricity, gas, and fuels costs rising sharply.
Health expenditure costs, for example, were significantly higher for rural residents compared to urban citizens. According to BBS data, health inflation in rural areas stood at 15.64 per cent in July, slightly declining to 15.50 per cent in August. By comparison, urban areas saw health inflation rates of 8.62 per cent in July and 10.26 per cent in August.
Out-of-pocket healthcare expenditure in Bangladesh is higher compared to other Asian countries, with inflation in the sector reaching approximately 13 per cent this year.
Transportation costs also saw higher inflation in rural areas compared to urban regions. In July, rural transportation inflation was 8.91 per cent but dropped to 6.55 per cent in August. By contrast, urban transportation inflation rates were 8.17 per cent in July and 3.81 per cent in August.
Inflation in housing, water, electricity, gas, and other fuels has also been higher in rural areas than in urban centres. Over the last three months, from June to August, inflation in these sectors reached 9.63 per cent, 9.79 per cent and 11.76 per cent in rural areas, compared to 7.54 per cent, 7.75 per cent and 9.17 per cent in urban areas during the same period.
