Double-digit inflation hits food, health – strains household budgets

Food inflation soared to a five-month high of 10.22% in April while inflation in the health sector surged to 13.69%, according to data released by the Bangladesh Bureau of Statistics today (13 May).

Food price inflation was at 10.76% earlier in November last year. It decreased to single digit the following month, and by March, the rate stood at 9.87%.

The health sector saw a substantial increase in April from 2.16% in March. Notably, rural health inflation far surpassed urban rates, hitting 17.04% in April compared to just 1.31% in March. Urban health inflation rose to 7.14% from 4.37% in March.

Non-food inflation, on the other hand, stood at 9.64% in March and slightly dipped to 9.34% in April.

Experts warn this sharp rise in health and food will strain household budgets, particularly for low-income families who allocate a larger portion of their income to food and healthcare expenses.

Mustafa Kamal Mujeri, executive director at the Institute for Inclusive Finance and Development, said the government's efforts to control overall inflation through monetary policy have yet to yield significant benefits.

"The complexity of the central bank's actions means that reducing inflation will take time. These measures have not yet produced tangible results, especially concerning food inflation," he said.

Mujeri pointed out that the significant rise in health inflation is not solely due to higher medicine prices but also increased healthcare usage.

"Inflation is leading to inadequate nutrition and vulnerability to illness. Besides, many essential foods have become unaffordable for many, worsening their health issues and escalating medical costs," he explained.

The government should enhance income-based support for the rural poor and offer subsidised food to ease their financial strain, said the economist.

Binayak Sen, director general of Bangladesh Institute of Development Studies (BIDS), on 9 May told the media that the official inflation figures do not match the reality on the ground.

He said, "The statistics bureau published inflation data for March, indicating a food inflation rate of 9.87%. However, conducting a field-level survey, we discovered that the actual inflation rate stood at 15%."

Overall inflation dips slightly

In April, overall inflation decreased slightly to 9.74% from March's 9.87%.

Zahid Hussain, former lead economist at the World Bank's Dhaka office, said the decline was mainly to lower non-food inflation, particularly in urban areas.

He noted that the drop was largely influenced by reduced prices in housing and household goods, typically financed through credit. "As credit distress grows and demand weakens, core inflation has also somewhat softened."

Regarding food inflation, the economist mentioned that April's increase was influenced by Eid and Ramadan. Additionally, other local and international issues could have also contributed to food inflation, often resulting in unexplained price hikes in essential goods.

"It's challenging to explain food price inflation with the limited data available," he remarked.

Overall inflation rising in rural areas

Overall inflation in April decreased in urban areas but increased in rural regions. Rural inflation stood at 9.46% compared to 9.94% the previous month, while urban inflation was 9.92% in April against 9.68% in March.

Both food and non-food inflation rose in rural areas in April. Rural food inflation increased to 10.25% from 9.86% in March, and non-food rural inflation rose to 9.60% from 9.94% the previous month.

In urban areas, non-food inflation increased to 10.19% in April from 9.98% in March, while excluding food, urban inflation eased to 9.01% from 9.71% in April.

BBS data show that the wage rate was 7.85% in April compared to 7.80% in the previous month. This indicates that wage growth has been below inflation for the past 27 months