The Consumer Association of Bangladesh (CAB) says the overall inflation in Dhaka reached a staggering 11.08 per cent at the end of 2022, which is a stark contrast to the government data that puts average inflation in the country at only 7.7 per cent that year.
Presenting the findings of an annual report on the prices of goods and services at a virtual press conference on Saturday, CAB added that the food inflation in Dhaka was 10.03 per cent during that period, while non-food inflation was 12.32 per cent.
CAB President Golam Rahman had presided over the event.
On behalf of CAB, Bangladesh Institute of International and Strategic Studies (BIISS) Research Director Dr Mahfuz Kabir presented the report, which makes a number of recommendations to reduce inflation in the country, such as boosting the social safety net coverage.
According to the study, inflation crossed double digits for the first time in June last year, with August inflation hitting a record high of 15.31 per cent. During a number of months last year, non-food inflation hovered around 19 per cent and food inflation nearly 18 per cent.
The biggest contributors to the rise in inflation were prices of essentials including rice, flour, pulses, bakery products, sugar, fish, eggs, edible oil and service costs.
Besides, costs of imported fruits, tea/coffee, local and imported milk, cleaning products, personal hygiene products and transportation have increased exponentially throughout the year.
CAB collected monthly price data from 11 markets across Dhaka megacity (consisting of Dhaka North and South city corporations) for this report.
Their daily price monitoring activity covers 141 food items, 49 non-food items, and 25 services.
To tackle inflation, the CAB recommended that the OMS programme should be strengthened with proper monitoring to adequately cover low-income households in times of high inflation. Food assistance currently available to one crore families in the country should be expanded.
The scope of employment programmes should also be increased for boosting sources of income.
Apart from this, the government-funded aid programmes regarding food, non-food basic commodities and cash transfers should be expanded by temporarily increasing the coverage, the report adds.
Urban population faces more pressure and vulnerability due to inflation than the rural population, and more attention should be paid to the urban low-income population by strengthening the social safety net.
Speaking at the press brief, CAB President Golam Rahman said, “Bangladesh’s development has progressed in the last decade. People’s incomes have increased. Our per capita income has increased. Along with that, the living costs have also increased.
“Although the number of poor population has decreased, around 4 crore people are still living below the poverty line. So inflation becomes a serious issue in people’s lives. When product prices increase, there is little hope that the prices will ever decrease. So, the increased costs triggered by inflation should be adjusted by boosting the income.”
He continued, “The year 2022 was not very comfortable. Like Bangladesh, nations across the globe faced similar situations. The impacts of Covid-19 pandemic and Russia-Ukraine war have shaken the world.
“As Bangladesh’s economy is connected to the world economy, the ripple effect impacted us as well.”
Inflation trend in Dhaka
The CAB report mentions that food inflation was 7.29 per cent in January last year, but began to increase in May, hitting 9.7 per cent in June. Non-food inflation then reached double digits in June to 11.25 per cent, which helped push up overall inflation to 10.4 per cent that month.
Non-food inflation was the highest (18.6 per cent) in July, mainly triggered by an upward revision in fuel prices. This has also contributed to an increase in overall inflation. Then food inflation rose to 15.86 per cent in August.
Food inflation in September reached the highest in 2022 at 17.25 per cent. However, it gradually decreased during the following months. It however remained in double digits in December at 12.1 per cent.
Meanwhile, non-food inflation declined slightly to 14.7 per cent in August, but later increased yet again in December to 16.03 per cent, according to the CAB annual report.
Non-food inflation triggered by higher fuel prices and rapid devaluation of the Taka against the USD have played a major role in increasing production costs, prices of imported goods and transportation costs.
What’s the impact on low-income consumers?
Food inflation was either negative or very low till April last year. Both food and non-food inflation rose sharply in May. Food inflation entered double digits in June to 10.32 per cent and subsequently declined in July.
Non-food inflation was very high at 18.86 per cent the same month. It again rose to the highest level of the year at 15.31 per cent in August.