Food inflation hits 16-month high

The food inflation has increased by 0.62 percentage point to 6.22 per cent in February which is the highest in 16 months from the economic perspective of the country.

In January, the food inflation was 5.60 per cent.

Bangladesh Bureau of Statistics on Monday published the “Consumer Price Index (CPI), Inflation Rate and Wage Rate Index (WRI) in Bangladesh”.

However, the food inflation was highest 7.34 per cent in October 2020.

The BBS data showed that the general point-to-point inflation rate has increased by 0.31 percentage point to 6.17 per cent in February 2022 over the previous month.

The inflation rate in January 2022 was 5.86 per cent while inflation rate was 6.05 per cent in December 2021, according to the BBS.

Currently, the price of essentials especially rice, oil, flour, lentil and other groceries has increased rapidly in both wholesale and retail markets in the last couple of months.

Recently, the South Asian Network on Economic Modeling (SANEM) published a report on inflation which stated that Marginalised households in rural and urban areas face food inflation rates that are more than two times the officially reported figures.

“The point-to-point food inflation rate in January 2022 in urban household groups was 11.36 per cent while it was 5.47 per cent as per the Bangladesh Bureau of Statistics (BBS). The rate in the same period in rural household groups was 11.21 per cent while it was 6.07 per cent according to the BBS,” the report said.

The point-to-point food inflation rates in February 2022 in urban and rural areas for the marginalised group were over 12 per cent, according to the report.

The rate was 12.47 per cent in urban areas and 12.1 per cent in rural ones.

Meanwhile, the non-food inflation rate went down by 0.16 percentage point to 6.10 per cent in February from 6.26 per cent in January 2022.

The inflation in rural areas rose at a higher rate than that in the urban areas last month.

In February, the rural inflation increased to 6.49 per cent from 6.07 per cent in January.

The food inflation in rural areas was recorded at 6.62 per cent last month, up from 5.94 per cent in January.

The non-food inflation decreased to 6.25 per cent in February in rural Bangladesh from 6.32 per cent in January.

The urban inflation increased to 5.59 per cent in February from 5.47 per cent in January.

The food inflation in urban areas was recorded at 5.30 per cent in the last month, up from 4.85 per cent in January. However, the non-food inflation in urban areas decreased to 5.91 per cent in February from 6.17 per cent in the January.

According to a recent presentation on ‘Bangladesh Economy’ by the Centre for Policy Dialogue, the weights used for food in the calculation of CPI are significantly higher than share of food expenditure in either income or consumption expenditure.

“The consumption basket used for calculating overall general inflation was created in 2005 and does not reflect the current consumption pattern of consumers or the actual prices in the market in 2022,” it also said.

The CPD recommended that the government provide direct cash support to the poor, enhance social protection for low-income families, and extend stimulus to the small businesses for their survival during the trying time.

“The government should prepare for maintenance of adequate food stock not only through better agricultural production, but also through import. There is a need for actual demand estimation of rice and other food items in the country,” according to the local think tank.