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The recent inflation has created 21 lakh new poor around the country, at a time when people are still recovering from the Covid-19 shock that pushed 3 crore people below the poverty line over the past two years, according to a recent study.
It said the gains of recovery from the pandemic have been sluggish and disrupted due to the inflation and that led to the latest new poor between January and May this year.
This also means that some 3.09 crore (or 18.54 per cent) of the total population were among the new poor until the end of May due to inflation and the slow recovery among the vulnerable non-poor, said the study.
In May, the average income of poor and vulnerable non-poor was still 15.4 per cent below pre-Covid levels. Urban distress continues to be higher with average income still 25 per cent below pre-Covid levels. Overall, 10 per cent still have no income.
The survey among low-income communities has been jointly conducted in multiple phases by the Power and Participation Research Centre (PPRC) and BRAC Institute of Governance and Development (BIGD) between April 2020 and May 2022.
The key findings were published on Sunday at a virtual press conference, titled “Inflation, Coping, and Recovery Challenges,” during which PPRC Executive Chairman Dr Hossain Zillur Rahman and BIGD Executive Director Dr Imran Matin discussed the issues and highlighted possible solutions.
Almost 4,000 households were surveyed in the fifth round of the survey carried out throughout May.
Dr Rahman said, “Inflation has compounded the Covid-induced disruptions to economic recovery, with real incomes of poorer households still 15 per cent below pre-Covid levels two years from the onset of the pandemic.
“Bangladesh now faces a new risk — the reversal of meeting the targets of nutrition and education set in the Sustainable Development Goals (SDGs).”
Significant disruption
According to the survey, the ongoing pressures of inflation have negatively affected the real income, food security and essential household expenditures of the low-income households and significantly disrupted their economic recovery from the Covid-19 shock.
The researchers found that per capita daily incomes were steadily recovering, showing an increase of 27 per cent from August 2021 to January 2022, after the second Covid lockdown.
But they started reversing again by 6 per cent between January and May 2022 due to inflation, disrupting the expected recovery of real incomes to that of pre-pandemic times.
The recent fall in daily per capita real incomes in the urban slums (8 per cent) has been sharper than in the rural areas (3 per cent). Livelihoods in urban slums were already more severely affected by Covid and recovering more slowly, compared to those in villages, said the survey.
The inflation has further slowed the recovery in the slums.
Rickshaw pullers, factory workers, and housemaids suffered the greatest loss in real income in the first four months of this year.
The inflationary pressure also appears to have pushed more women to find work. Some 40 per cent of female survey respondents were engaged in income-generating activities in January, which jumped to 52 per cent in May.
But 36 per cent of women respondents who were working before Covid are still jobless, according to the study.
Impact of rising prices
Most of the surveyed households have drastically reduced or stopped the consumption of major food items, such as fish, meat, milk and fruit, because of rising prices since February this year, said the study. In this case, as well, the reduction in quantity and quality of food consumption has been more extreme in the urban slums than in the rural areas. As of May, one in five urban slum households had skipped at least one meal in the last month due to a lack of money.
Compared to August 2021, more households were depending on their incomes and production for their food needs in May 2022, as opposed to loans, dues from shops, and help from relatives. This seems to be a positive development.
However, 38 per cent of the households also said they needed to borrow more money but could not, mostly because of reasons like inability to repay or existing large debt burdens — which indicates that many of these households are under severe financial stress.
Moreover, since February 2022, two-thirds of the households have reduced non-food expenditures, including a worrying decrease in medical and children’s education expenses. The households are also buying less and buying lower quality goods to cope with the price hikes, according to the survey.
Compared to last year, the purchase of fair price rice by both people below and above the poverty line has increased in May 2022. There has been a corresponding change in the purchase of TCB food. Of the surveyed households, 38 per cent bought from TCB since February 2022.
Despite this, there is still a large unmet demand. Only less than 5 per cent of households said that they did not need TCB food.
Over half of the households admitted they needed to buy from TCB but could not for various reasons, including not finding the opportunity or not having a TCB Family Card.
A fifth of them also said they were unable to complete their purchases due to the long waiting time in the queues, said the study.
What to do?
More than half of the households believe governance issues led to price hikes, said the study findings.
The majority want the government to punish the syndicates and corrupt businesses, while a third suggested reducing prices, particularly for low-income households.
“The inflation-induced reversal comes within a larger context of multiple prolonged crises,” said Dr Matin. “Government action for the informal sector and the poor will be critical at this time, and this needs to protect both consumption and production capabilities.
“Social protection also needs to be reimagined to align with our challenges and ambitions.”
The researchers said controlling the price hikes would be the top expectation and reducing the price of necessities should be a top priority in the national budget for the upcoming 2022-23 financial year.
