Oil shock fuels inflation, yet data mismatches real picture  

Bangladesh inflation surged to 5.98% year-on-year in November – a month marked by diesel price hikes resulting in spiralling transport costs, dearer food and spiked goods weighing on the people.     

Food prices rose 5.43% and non-food items 6.87% in November leading to an overall 5.98% inflation that is 0.28 percentage points up from October, according to a report by the state-run Bangladesh Bureau of Statistics (BBS) on Sunday.  

But economists say the BBS inflation data do not reflect the actual price surges of goods and services prompted by the diesel-hike.    

According to BBS, both food and non-food inflation surged in November compared to the previous month. Food inflation in November ticked up by 0.21 percentage points from October's 5.22%, while non-food items by 0.39 percentage points from October's 6.48%.   

"The BBS data do not reflect the actual price surges of goods and services," Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), told The Business Standard. She attributed the BBS's decades old inflation base-year to the calculation "mismatching reality".      

"People's consumption patterns have changed owing to an increasing income. New products and services joined the consumption list. Against the backdrop, it is not possible to get accurate inflation data using a 20-year-old base," she commented.

She believes top policymakers also face obstacles stemming from inaccurate and inconsistent data.

BBS Director General Mohammad Tajul Islam also agreed that the base year "has become old", and said they are working to update it.

According to BBS, rural areas logged 6.20% inflation in November – up from October's 5.81%. November food and non-food inflation breakdowns in rural areas are 5.90% and 6.78%.

In November, inflation in urban areas rose to 5.59% from 5.50% in October. The food and non-food breakdowns in cities are 4.37% and 6.99%.   

The bureau by moving average method – analysing data points by creating a series of averages of different subsets of the full data – said the average inflation in the last 12 months stood at 5.48% as the government set a 5.5% inflation ceiling for the current fiscal year.   

Inflation rate from December 2019 to November 2020 was at 5.73% suggesting the average inflation has dropped.   

Even with pricier commodities, living expenses dropped in Nov

Though November saw unusual rises in commodity prices, BBS says living expenses dropped in November compared to previous month.    

The BBS report says the Consumer Price Index (CPI) – an instrument to measure inflation – was 307.49 points in October that in November dropped to 305.97.      

Even with record food price spikes in last month, BBS says expenses in food, beverage and tobacco sub-slab reduced the highest 1.22%. Spending for non-food items soared by 0.68%, while transportation topped the index with a 2.30% rise.    

TCB says rice prices soared at least 10%

One kg of premium Nazir rice used to cost Tk55-58 in Dhaka in November last year. The rate spiked to Tk60-68 per kg in November this year registering a Tk3-8 hike per kg in one year, according to the state-owned Trading Corporation of Bangladesh (TCB).

TCB data suggest prices of fine and premium rice ticked up more than 13%, while coarse prices surged up to 10% in the last one year.   

In last year, non-brand flour was at Tk28-34 per kg that rose to Tk32-38 in November this year – registering a 21.43% rise. During the period, branded flour prices rose by 40%.

In one year, TCB says non-brand soybean oil prices have gone up by Tk45 to Tk145 per litre from Tk100. Soyabean hike is 45% while other edible oil categories also edged up by 40%.

Besides, other daily essentials ranging from lentils to spices to powdered milk logged a minimum 9% to maximum 50% rise in the last one year.