BBS inflation figures don’t reflect the reality: Sanem

Marginal people, living in both rural and urban areas, are facing the pressure of soaring commodity prices more than any other quarter of society, but official figures of inflation do not reflect the real picture of the price hikes and their impact on the living standard of the marginalised households, claims new research by the South Asian Network on Economic Modelling (Sanem). 

Sanem in its study found an 11.36% year-on-year increase in food cost for marginalised households living in urban areas in January this year – more than double the 4.85% urban food inflation, as estimated by the Bangladesh Bureau of Statistics (BBS).

Similarly, marginalised people in rural areas faced an 11.21% hike in food prices, although the BBS estimated rural food inflation at 5.94%, according to the study report revealed at a webinar on Thursday.

The bureau of statistics compiles the consumer price index (CPI) with old data and a misleading commodity basket, experts and economists told the event. The government agency even has a tendency of showing lower inflation, they alleged.

Selim Raihan, executive director of Sanem, made the keynote presentation at the online seminar, entitled "Do the official inflation figures in Bangladesh reflect the actual inflation faced by the marginalised households in Bangladesh?"

He said a large number of people fell below the poverty line after losing their jobs and earnings during the Covid-19 period.

Even though the economy is giving a strong signal of recovery, the inflationary pressure may jeopardise this trend, he warned. A substantial number of people would fall below poverty again, he added.

Selim said the BBS compiles the consumer price index based on the result of the Household Income and Expenditure Survey (HIES) of 2005-06. The consumption pattern of the people has increased over time as a result of an increase in per capita income, but the BBS did not update the base even based on the HIES of 2016.

He also said the average consumption baskets used by the BBS to calculate the CPIs are not truly representative of the consumption pattern of many low-income households.

"The average food consumption is 61.13% of the total expenditure of the urban marginalised household and 65.36% of the total expenditure of the rural household under consideration, which is much higher than the food shares used by the BBS in its CPI calculation of 45.17% for urban areas and 58.54% for rural areas," Selim said, quoting the research findings. The BBS puts less emphasis on food consumption.

He marked supply-demand mismatch, disruption in the supply chain, non-competitive market, weak monitoring, price hike in global market, rise in fuel prices, and change in the exchange rate as some major reasons behind the creation of the recent inflationary pressure.

He asked for reducing market mismatch through a proper multi-agency assessment of demand and supply.

He also recommended that proper monitoring be ensured to ensure a competitive environment in the market.

Sanem Chairman Bazlul Haque Khondker said, "Long queues in front of TCB trucks lay bare people's plight caused by rising commodity prices. Food prices are also shooting up abnormally in the global market. We have become surprised when BBS figures show that inflation has not risen much."

Sanem Research Director Sayema Haque Bidisha said BBS data show that food inflation is higher in rural areas than in urban areas.

She demanded an explanation of the information, saying that it is logical that food inflation is high in urban areas because of extortion and various problems in the supply chain.

Mentioning that the national social security strategy had recommended taking into account inflation, she suggested increasing the coverage of social safety net programmes in the next budget as well as increasing the per capita allocation in this sector taking into account the issue of rising food prices.

Selim Raihan said Sanem calculated CPIs for marginalised using the detailed and disaggregated data of the nationwide survey of 10,500 households, conducted by it and the General Economic Division (GED) of the Planning Commission in 2018.

The RMG workers faced an 11.33% hike in food prices in January, while the rate was 12.45% in February. Similarly, day labourers in urban areas faced a 12.50% food price hike in February while the rate was 12.48% for rickshaw/van-pullers and 12.45% for small traders.

Four groups of people in urban areas faced a 12.47% food price hike last month.

The Sanem study found a 12.10% hike in the prices of food items for four marginalised groups in rural areas in February. Landless farmers faced an 11.96% food price hike, while the rate was 12.11% for day labourers, 12.08% for rickshaw/van-pullers, and 12.27% for small traders, respectively.